Report: Uncompensated Medical Care Costs Drop, Mostly in Medicaid Expansion States

Hospital costs for uncompensated care have decreased in states that opted to expand Medicaid under the Affordable Care Act, but have remained stagnant in the states that have not, a report released today by the Kaiser Family Foundation says.

Uncompensated care is how hospitals measure the care provided throughout the year for which they don’t receive any payment, which can lead to hospitals incurring bad debt.

Total uncompensated care in 2013 cost $34.9 billions in hospitals nationwide, with about $16.7 billion incurring in states that expanded the program and $18.1 billion in states that did not. In 2014, total costs fell to $28.9 billion nationwide, falling about 17 percent. Nearly all the decrease occurred in expansion states, the report says.

Still, the authors acknowledge that it’s difficult to determine how much of the savings were because more Medicaid reimbursements were made to to hospitals. For at least one hospital system, Ascension Health, that held true.

“While the experience of the Ascension Health system suggests that rising Medicaid shortfalls are offsetting the potential financial benefit of lower uncompensated care costs, this outcome is likely to vary substantially across hospitals,” they write.

Several policy changes are affecting Medicaid payments to hospitals, the report adds. Those includes state budget pressures affecting Medicaid payments, as well as reductions in disproportionate share hospital payments and payment changes that are happening because of Obamacare.

“At this point, it is unclear how recent and upcoming policy changes in Medicaid will affect the financial viability of hospitals,” the authors say. “Better data and monitoring of the effects of coverage changes as well as policy changes related to the supplemental payments will help to better evaluate hospitals financial well-being and the ability of safety net hospitals to serve Medicaid and uninsured persons.”

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