Healthcare is a significant part of the economy in Northern Arizona and one of the few with continued growth during the recession. Continuing uncertainties about the latest cuts are the biggest headache for hospitals and health centers across the region. “Things are in flux,” said Brian Hoefle, chief financial officer at the Yavapai Regional Medical Center (YRMC) in Prescott. “Reimbursement for patients on the Arizona Health Care Cost Containment System (AHCCCS) program already wasn’t covering full costs,” he explained. “We know that enrollment in ACHHHS and reimbursement from it will be cut, but the extent is still to be determined. Either way, it’s not good.”
Hoefle oversees total annual revenues of around $225 million. His operation currently receives annual Medicaid reimbursement of $20 million annually, contributing about nine percent of total revenues and accounting for 17 percent of overall patient load. Since 2007, more people have been qualifying for AHCCCS coverage due to increased unemployment, along with reductions in earnings and personal assets. YRMC is not planning any changes to staffing levels at this time, “but we will evaluate and adjust as we go along,” Hoefle said. At YRMC in Prescott, Hoefle predicts health care will be delivered less efficiently as more people turn to emergency rooms. “Loss of health care coverage makes people less likely to get routine, preventative care with a corresponding rise in critical incidents,” he explained. “So hospitals may have to increase capacity of emergency rooms, despite this being an expensive treatment option.”
What are the alternatives? The only tangible proposals being discussed at the state level so far is a hospital provider tax to help Medicaid continue to obtain federal matching. This proposal has been led by the Arizona Hospital and Healthcare Association (AzHHA) – a statewide trade association representing more than 100 hospitals, healthcare systems, affiliated health organizations, and the patients and communities they serve. AzHHA is worried that the cuts will not only harm low-income Arizonans but also damage the state’s economy. AHCCCS is a shared matching program between the state and federal government – for every $1 the state puts in, the federal government matches it with $2. Moreover, enrollment is counter-cyclical – meaning that as the economy declines, enrollment goes up.
AzHHA predicts that not only will businesses and families be forced to purchase private health insurance, but that commercial health plan premiums will rise because of hospitals passing on the cost of an increase in provision of emergency care to uninsured patients. But, with Arizona facing a fourth straight year of budget deficits and Medicaid costs rising by 65 percent over that time, the governor insists on taxing hospitals directly. On March 31, Brewer sent her planned reforms to U.S. Health Secretary Kathleen Sebelius in an attempt to close a gap estimated at $763 million for this year and $1.15 billion in 2012. Her move will slash the state’s “Cadillac” coverage – the Medicaid plan in Prop 204 approved by voters a decade ago that made Arizona one of six of the most generous states in the country – a state where employer-provided benefits are well below the national average. To make up the shortfall from the state’s general fund, cuts have already eliminated treatments such as transplants, dental care, podiatry and frozen the KidsCare health insurance program, while provider (e.g. hospitals and physicians)
Medicaid reimbursement has been cut by five percent. Now, Brewer is asking for a new five-year federal waiver to allow changes that will save the state $500 million – at the top of the list is freezing eligibility for a group quaintly termed “childless adults.” Brewer’s initial proposal to cut 280,000 from AHCCCS has been revised and the latest plans will see 120,000 people being dropped, with new enrollment frozen. The plan also increases AHCCCS co-payments, charges “no-show” fees for missed appointments and eliminates state reimbursement for emergency care of non-qualified aliens. The federal government has to approve the final proposals in advance of Sept. 30, when the state’s current AHCCCS agreement expires.
Robert Resendes, director at the Community Health Center (CHC) of West Yavapai in Prescott, sees a lot of uninsured patients. CHC has a patient mix of 35 percent on AHCCCS: 45 percent uninsured, 15 percent Medicare and five percent private policies. He acknowledges that the state legislature is in a tough spot – and is hoping for continued success in winning federal grant money for his center, which is facing a loss of $600,000 in the $4 million they get from Medicaid each year if AHCCCS enrollment is reduced by 10-15 percent. Resendes has just signed contracts with United Healthcare and Cigna to subsidize the uninsured side of the business, and is trying to increase the number of patients with commercial coverage. Any excess revenues will help pay for the rising proportion of uninsured patients. Resendes and his staff are also scrambling to write grants to obtain more federal money. “The federal government been generous so far,” Resendes said, “paying for our new clinic in Cottonwood that is still scheduled to open as planned in June.”
With grants to pay for positions such as dentists, dental assistants and nurse practitioners, Resendes is hoping to obtain to continue the federal subsidy to get them through the next two to three years. “We’re trying to diversify our revenue sources as much as possible (everything except a Medical Marijuana Dispensary), so that the Medicaid cuts don’t bring the whole house down!” he said.
Governor Brewer wants individuals to increase responsibility for their wellness. But with health care charges the leading cause of bankruptcy across the country as a whole, the stress can take a toll. The best hope for the newly uninsured and financially incapable is that they will be eligible to receive subsidized coverage in 2014 when the national health care law takes effect – and that they stay healthy in the meantime. QCBN
