Hospitals could take financial hit under Medicaid work requirements, study found

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From The Bulletin, the Mercury’s blog, where we post quick hits on the news of the day, odds and ends and commentary.

A new study from the Commonwealth Fund found that Medicaid work requirements not only will cause more people to lose insurance, but could also increase uncompensated care and hurt hospitals’ bottom line as well.

Under work requirements, Medicaid beneficiaries must document that they are working or that they qualify for an exemption in order to retain coverage.

The Commonwealth Fund concluded that, in the 15 states it studied, loss of Medicaid coverage due to implementing the work requirements will likely have a significant impact on revenue for hospitals due to an expected increase in uncompensated care. Hospital revenue could decline by as much as 22 percent in Kentucky, though Ohio hospitals are expected to take a smaller hit of between 12 and 13 percent.

The analysis does not specifically include Virginia hospitals because the state has only recently expanded its Medicaid program. Like many other states, Virginia’s work requirement application is still pending approval by the Centers for Medicare & Medicaid Services.

“This analysis demonstrates that imposing Medicaid work requirements could have a detrimental effect not only for people who could lose their health care coverage, but on hospital finances,” Dr. David Blumenthal, Commonwealth Fund president, said in a news release. “The way that states design these work requirements will play a big role in the severity of the loss.”

The report found that the severity of revenue loss will vary based on who the requirements apply to. States that apply them only to their expansion populations — such as Ohio — will see hospital revenues decline by smaller degrees versus others, like Kentucky, that apply the requirements to all their Medicaid beneficiaries, including those covered before the state expanded.

Virginia’s proposed program applies work requirements to its entire Medicaid population, though it has numerous exemptions. In its application, the state estimates that about 120,000 enrollees will be subject to work requirements.

In an emailed statement, Virginia Hospital & Healthcare Association spokesman Julian Walker noted that it is still unclear how much work requirements could impact Virginia hospitals.

“Uncompensated care and the hundreds of millions in financial losses it represents to Virginia hospitals and health systems each year is a constant reality in our nation’s health care delivery system,” he said. “That was true prior to coverage expansion in Virginia and it remains true now that the Commonwealth has expanded Medicaid eligibility to thousands of previously uninsured Virginians.”