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Hospital Data and Health Reform: What We’re Learning

Hospitals tend to be bellwethers of health care trends. So we applaud the Colorado Hospital Association for issuing a new analysis looking at hospital charges since January 1, when major provisions of the Affordable Care Act kicked in.

The report, based on data from 465 hospitals in 30 states, compares states that expanded Medicaid enrollment under the ACA with a roughly equivalent number of states that did not expand Medicaid.

It focuses on three payers: Medicare, Medicaid and uninsured patients who cover their own care. Data on charity care assumed by hospitals when patients are unable to pay their bill are also analyzed. The report analyzes charges, which is what hospitals bill patients and insurers. Reimbursement may be different than those charges because of rates established by Medicare and Medicaid, or negotiations with health insurance companies.

My primary take-away from the new report is that hospitals in expansion states saw an increase in the proportion of Medicaid charges while the charges stayed constant in non-expansion states.

Specifically, the analysis found:

  • The portion of hospital charges to Medicaid in expansion states rose more than three percentage points from 15.3 percent to 18.8 percent – or 29 percent – between the first quarter of 2013 and the first quarter of 2014.   
  • The portion of “self-pay” charges to uninsured patients dropped in expansion states during the same time by 25 percent. Likewise, the average amount of hospital charity care – expressed in the report as a dollar amount instead of a proportion – declined by 30 percent.
  • Medicaid, self-pay and charity care stayed relatively consistent in states that did not expand Medicaid. The proportion of Medicare charges stayed relatively constant in both types of states as well.
  • Rural and urban hospitals in Colorado experienced similar declines in Medicaid, self-pay and charity care.

The direction of the findings is what we would expect. When more patients are covered by Medicaid, which happens when a state expands its enrollment, the proportion of Medicaid charges issued by a hospital should increase. Likewise, charity care or self-pay should decrease as more people gain insurance coverage.

The CHA report raises a number of questions:

  • Charges describe what hospitals bill patients and insurers, which may be different than what hospitals actually receive in reimbursement. Would examining revenues change the findings?
  • What about private insurance? Have charges to private insurers increased now that people are purchasing health insurance directly from an insurance company through the state or national marketplaces, or receiving employer-sponsored insurance through their work?
  • How do these findings compare to the expansion we have seen in the Medicaid population?  For example, during the first quarter of 2014, the Medicaid population in Colorado increased 26 percent.  Would we expect the proportion of Medicaid charges to be higher or lower based on the number of people newly insured?
  • To what extent do increases suggest pent-up demand for hospital services among the uninsured?
  • Are the upward Medicaid trends driven by increases in emergency department usage by Medicaid enrollees?  What types of services have had the largest increases? 

Finally, a particularly challenging issue is cost shifting, in which hospitals and other care providers shift unreimbursed care for the uninsured to commercial populations.  One of the arguments for expanding Medicaid was a prediction that cost shifting to commercial payers would decline.

While it is difficult to make a direct connection between hospital charges and uncompensated care, we look forward to learning more about how increases in commercial and Medicaid coverage have impacted the cost shift.

The analysis is a step forward in confirming what we would expect to see under the ACA. Expanding public insurance has led to an increase in the proportion of Medicaid hospital charges and a decline in charity care and self-pay.

We eagerly await future analyses from CHA that help to paint an even clearer picture of the ACA’s impacts on Colorado hospitals – and, by extension, the overall health delivery system.