Kentucky Hospital Association (KHA) Details ACA Impact on Hospital Costs

A report published last month by the Kentucky Hospital Association (KHA) details payment cuts to hospitals in the state, which are projected to reach almost $7 billion by 2024. While the report lauds the Affordable Care Act (ACA) and the expansion of Medicaid in the state for expanding health coverage (400,000 people have gained insurance), related changes have also “resulted in hospital staff layoffs and threaten to reduce the availability of hospital care, especially in rural areas.”

The report notes that the expanded health coverage could be compromised if hospitals end up reducing services, which could also impact the quality of care that is available. Some key factors noted in the report include the following:

>> Medicaid and Medicare are reimbursing significantly below the cost of providing care; Medicare is paying 86% and Medicaid is paying 82% of the actual cost of care.

>> Hospital readmission penalties have increased to 3% in 2014, and the penalties are levied against hospitals even when the readmission was unrelated to the patient’s original stay or was not preventable.

>> Even if the rate of increase in hospital-acquired conditions, such as infections, is small, 25% of all hospitals in the country will see their Medicare payments cut as a result.

>> Payments to offset costs related to uncompensated care, so-called disproportionate share hospital (DSH) payments, are being cut significantly even though hospitals will continue to incur costs related to uncompensated care.

The report notes that “bad debts accounted for 43% of all uncompensated care costs in 2013 and have grown by nearly $200 million over the past three years as more privately insured patients have moved to plans with higher deductibles and co-payments they cannot afford.”

For more information and other key data points, you can download the 15-page report at: http://assets.fiercemarkets.com/public/healthcare/code-blue-report.pdf