Safety-net hospitals fear financial impact of Medicaid purge – Crain’s Chicago Business

But as redeterminations resume, anywhere from 10% to 18% of enrollees are expected to lose coverage as soon as July. That’s troubling for local safety nets like Loretto Hospital, Sinai Chicago, Cook County Health and Humboldt Park Health, where Medicaid reimbursements account for more than half of total revenue.

While some patients removed from Medicaid may find other insurance, many will become uninsured and unable to pay for medical care. With fewer dollars coming in, safety-net leaders say they may be forced to cut back on charity care and hiring plans. In more severe cases, leaders say eliminating services and staff is a possibility.

“(Medicaid) has become a lifeline for us,” says Tesa Anewishki, CEO of Loretto Hospital in Chicago’s Austin neighborhood, where about 64% of the hospital’s annual revenue comes from the program. She expects up to 5% of Loretto’s Medicaid revenue to vanish, which could force the hospital to make tough decisions.

“It will be a huge financial strain on the hospital when that happens,” Anewishki says. “We don’t want to think about having to cut services or cut jobs (to) remain open — that means cutting access to health care the community needs.”

The likely loss of revenues raises questions about whether safety-net hospitals can persevere in their missions to serve low-income and vulnerable patients as rising costs and low Medicaid reimbursement rates make it harder to cover their costs.

“No margin, no mission, even if you’re a not-for-profit safety-net institution with a dedicated mission to help,” says Anthony LoSasso, a health and labor economics professor at DePaul University.

Sinai Chicago, which operates Mount Sinai Hospital in Douglas Park, is the city’s largest safety-net system. Payments from Medicaid accounted for 51% of Sinai’s revenue last year. CEO Dr. Ngozi Ezike can’t provide exact projections for how much Medicaid revenue she expects to lose when redeterminations restart, but she says any amount will have a significant impact. Like Loretto, Sinai is helping Medicaid patients navigate coverage options to prevent severe revenue dips that could lead to cutbacks.

“We don’t want to cut services. We don’t want to cut people,” Ezike says. “We’re trying to figure out all the ways we can tighten our belt and maintain these critical services to people who really need them.”

Similar calculations are going on at Cook County Health, a public safety-net hospital system. The system’s hospitals relied on Medicaid for 60% of their 2022 revenue, says CEO Israel Rocha Jr. He expects redeterminations to reduce enrollment in the system’s Medicaid plans by 20% to 365,000, reducing revenue by 4%, or $40 million.

“$40 million is an incredible amount of money that can make a difference in what our system does,” Rocha says, noting that $40 million covers the average annual salaries for about 160 physicians.

In a best-case scenario, some patients who lose Medicaid coverage will switch to private plans that typically pay hospitals more, LoSasso says.

“That’s a win,” he explains. “They’re probably going to make at least twice what they’re making from Medicaid on that patient.”

Hospital executives Crain’s interviewed criticized what they described as low Illinois Medicaid reimbursement rates, saying rates must increase for safety nets to survive.

“On average, we get about 30 cents on the dollar,” Loretto’s Anewishki says. “We’re providing a quality service, but you’re asking us to do it at a rate that is not really sustainable.”

The Illinois Health & Hospital Association, which represents nearly every hospital in the state, backs legislation that would raise Medicaid reimbursement rates by about 20%. The bill is in the early stages of the legislative process, currently in the Senate’s Assignments Committee.

“The ability of Illinois’ hospitals and health systems, already stressed from the pandemic, to remain financially viable and continue providing access to care in all communities relies on a Medicaid rate that recognizes these growing cost pressures,” IHA spokeswoman Paris Ervin said in a statement.

Without more support for safety nets, hospital leaders say Chicago is at risk for seeing life expectancies get even lower in certain neighborhoods, exacerbating the widening racial death gap. By the end of 2020, the first year of the COVID-19 pandemic, life expectancy for Black and Latino residents was 69 years and 76 years, respectively, compared to about 80 years for their white counterparts, according to public health department data.

At Humboldt Park Health, which predominantly serves Black and Latino patients, about 80% are on Medicaid. Like his peers, CEO José Sánchez worries about steep Medicaid revenue losses, and the impact on the amount of care the hospital can provide to the area’s residents.

“It’s unsustainable. It’s scary,” Sánchez says. “And at the end of the day, it’s the patients who are going to suffer.”

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April 14, 2023 at 06:53AM

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