Tennessee Should Expand Medicaid—Or Pay Dearly

In Perspectives by Joe Sullivanleave a COMMENT

Unless recalcitrant legislators stop obstructing Gov. Bill Haslam’s plan for getting a billion dollars a year in federal Medicaid expansion funds, the Obama administration should start playing hardball with the state.

What ought to get the legislators’ attention is notice from Washington of a halt to what amounts to a $500 million-a-year federal dole that’s going to Tennessee hospitals for what’s called uncompensated care reimbursement. The dole takes the form of a special Medicaid dispensation, known as a waiver, that’s due to expire next June 30. And officials at the Center for Medicare and Medicaid Services have already served notice that the waiver isn’t likely to be extended in anything like its present form.

If the estimated 280,000 low-income Tennesseans whom the Affordable Care Act made eligible for Medicaid were being covered, it would pay their medical bills, and the hospitals wouldn’t be incurring anything as much as the uncompensated care cost.

So there’s no good reason for CMS to keep reimbursing them for it when having Medicaid cover the cost of care is a far preferable way for the hospitals to get paid. Granted, the federal share of Medicaid expansion payments is due to drop from 100 percent in 2016 to 90 percent by 2020. But the Tennessee Hospital Association has committed to legislated assessments on its members to cover the difference. So there would be no cost to the state.

Loss of the uncompensated care funds in the absence of Medicaid expansion would be a crippling blow to many hospitals. But maybe it’s the wake-up call that’s needed to get the attention of legislators who’ve been blocking Haslam’s expansion plan. Some of them may claim that a CMS cutoff would be coercive and violate the terms of the 2012 U.S. Supreme Court decision voiding the provision of the ACA requiring states to adhere to its Medicaid expansion or forfeit much of their existing Medicaid funding.

When CMS threatened Florida with a cutoff of uncompensated care funds upon expiration of its waiver earlier this year, Florida Gov. Rick Scott sued to prevent it on just these grounds. But he soon backed down and agreed to a settlement under which the funding will be reduced from $2 billion to $600 million over the next two years. (Florida has also spurned Medicaid expansion but has vastly more non-citizen residents who aren’t eligible for Medicaid than Tennessee. So more of an extension there seems justified.)

Tennessee is one of eight other states that have uncompensated care waivers. (Don’t ask me how or why.) And while the exact terms of CMS’ conveyances to the state haven’t been made public, they are believed to be similar to those contained in a published letter that went to Florida where the funding is known as the Low Income Pool. To wit:

“When the Affordable Care Act was enacted, it established a more comprehensive approach to providing health care coverage, including Medicaid, while supporting hospitals that serve communities with the greatest needs. Medicaid expansion would reduce uncompensated care in the state and therefore have an impact on the LIP, which is why the state’s expansion status is an important consideration in our approach to extending the LIP beyond June.”

This is a much more nuanced expression than Congress’ punitive approach that the Supreme Court struck down. While lawyers disagree on just about anything, the prevalent view is that cutting or terminating uncompensated care waivers would hold up in court.

It will be hard for Haslam to get his way with true red legislators in an election year, especially a presidential election year in which they can hope for a Republican victory that will lead to the repeal of Obamacare.

On the other hand, public opinion polls continue to show that a clear majority of Tennesseans favor Medicaid expansion, which would primarily reach childless adults with incomes below 100 percent of the poverty line. Perversely, they aren’t eligible for subsidized coverage on the government health care exchange either. This “coverage gap” is an outrage. And if Haslam can’t get Medicaid expanded, then he should take the “private option” approach of a waiver to get these unfortunates enrolled on the exchange that both Democrat and Republican governors of Arkansas have supported with CMS approval.

Notably, the Arkansas Hospital Association has reported a 65 percent drop in uncompensated care in that state last year to about $125 million. (Arkansas is not one of the nine states with a waiver that begets federal funding.) The association attributes the decline to the extension of coverage to some 250,000 previously uninsured people via the private option, producing a 60 percent in the uninsured rate, the largest of any state. An association release adds that, “The private option has given many of our rural hospitals a better chance to remain open for their communities. Arkansas has not seen rural hospital closures like other states and this can be directly attributed to insurance coverage for a previously uninsured population.”

When will Tennessee catch on?

Re: Jerry Burgess

In a previous column, I said that the president of Community Health Alliance, Jerry Burgess, misled me with assurances on Oct. 9 that the firm was geared up for 2016 enrollments on the government health care exchange. That was five days before he announced that CHA was shutting down.

In his announcement, Burgess ascribed the firm’s demise to an adverse determination by the federal Centers for Medicare and Medicaid Services that “led to an unavoidable outcome.” While this determination occurred on Oct. 1, Burgess insists that he was engaged in discussions with state and federal officials that he was hopeful would save the firm until two days before his Oct. 14 announcement. I will take his word for this.

Joe Sullivan is the former owner and publisher of Metro Pulse (1992-2003) as well as a longtime columnist covering local politics, education, development, business, and tennis. His new column, Perspectives, covers much of the same terrain.

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