Close to Home

Cuts in Medicaid Reimbursement Rates May Reduce Patient Access to Care

Patient dumping in the hospital sector, says PCHRG, has reached widespread proportions mainly because of concerns over reimbursement rates. Moreover, the report continues, this dumping of Medicaid, uninsured, and indigent patients continues to persist despite state and federal laws expressly forbidding this act. The report found that almost 700 hospitals over the last ten years have been accused of patient dumping. And the Washington, D.C.-based organization concludes that the actual number of violations is much higher, since a number of cases are never reported to the government.

While hospitals that violate federal anti-dumping laws may be banned from participating in the Medicare program, which is a significant source of revenue for acute-care facilities, the report notes that the vast majority of violators receive no penalties. Patients in managed care may also find themselves having their treatment delayed while the hospital seeks authorization for payment, the report notes. And these patients may also find themselves being shifted from one hospital to another in a dangerously unstable condition because the health maintenance organization fails to respond, the report concludes.

Contrary to studies suggesting that acute-care facilities will shift the costs to more affluent patients, the study conducted by HRET found that private facilities in California tended to reduce the number of services provided rather than shift the expense. Medicaid-dependent facilities, the Chicago-based organization reported, either cut services by an average of 37% or else closed their doors. "While service reductions may enable most providers to survive, some will not," explains William D. White, a professor of economics at the University of Chicago and a lead researcher for the HRET report. "Those facilities with a disproportionate elderly population seem especially likely to close," he adds.

These organizations’ fears seemed to be somewhat confirmed last month, when Louisville, Kentucky-based Vencor Inc., tried to decertify the Medicaid beds in several of its nursing facilities. The company has since discontinued the transfer and discharge of its Medicaid patients, but Vencor CEO Bruce Lunsford emphasized in a press release that he believes the Medicaid system is inherently flawed. Lunsford warned that the nation can no longer rely on the existing Medicaid system to meet the long-term care needs of the elderly, saying that the system fails to recognize the acuity level of many long-term care patients.

Lunsford’s statements bode badly for Medicaid patients, considering that Vencor is one of the nation’s largest operators of long-term care facilities. A few months ago, this long-term care giant was touted by Wall Street analysts as one of the most likely long-term care providers to succeed under the Balanced Budget Act of 1997 (BBA) because of the company’s synergistic control of nearly 400 long-term care facilities with about 45,000 beds. But Lunsford now says that the transfer of the Medicaid program to the states as part of the BBA has ensured the inadequate care of chronically ill patients. "Hopefully, this situation will increase awareness and raise the national debate over the two-tier system that has been created for Medicare and Medicaid patients," Lunsford said in response to the public attention Vencor received, after it attempted to decertify the company’s Medicaid beds.

But in the meantime, the nation’s estimated 38 million Medicaid recipients will have little guarantee that their needs will be met, says the PCHRG report. The report concludes that true health care reform–including universal coverage–is needed to put a stop to this "unconscionable and deadly practice [of patient dumping]." The recent problems in the hospital sector demonstrate that even Non-Medicaid patients insured through managed care organizations are at risk of being denied access to critical medical services as long as economic, rather than medical, consideration play the biggest role in making health care decisions, the report warns.