N.C. Hospital Officials Worried State will Turn Down Medicaid Money
Feb. 16--Patient care may be reduced and some rural hospitals could be forced to close if the state rejects federal Medicaid money at a time when payments to medical providers is being scaled back, hospital executives say.
The Republican-controlled state legislature has a final vote scheduled Monday to reject the money -- more than $2 billion a year statewide by 2015 for the Medicaid health insurance program for the poor. Hospitals had counted on that money to make up for revenue reductions scheduled to take effect in 2014.
The governor is expected to sign the bill.
The loss of federal Medicaid money combined with the revenue reductions means "there's going to be a lot of pressures on some hospitals," said Carl Biber, chief financial officer for Columbus Regional Healthcare System in Columbus County. "And unfortunately, probably some, like any business under this kind of pressure, may not make it."
Columbus Regional has strong finances and is not at risk of shuttering, Biber said. The hospital has found ways to make itself more efficient and improve patient care, he said, and will continue to strive to innovate as the revenue picture changes.
But about a third of North Carolina's hospitals operate at a loss, said spokesman Don Dalton of the N.C. Hospital Association. Another third are on the edge, with less than 5 percent profit margins, he said. The rest have margins of greater than 5 percent.
Dalton would not say hospitals are at risk of closure because of upcoming revenue reductions. But the struggling two-thirds will have to make difficult decisions, he said.
"There may not be a lot they can do other than reduce services and employment to try to save more money," he said.
Some sections of a community hospital, such as the emergency department and maternity services, typically lose money, Dalton said.
Sampson Regional Medical Center in Clinton lost money this past fiscal year.
It was founded in 1950 with the intent to serve every patient who comes through its doors, regardless of ability to pay, said David Masterson, the hospital's chief executive officer.
That could change in the emergency department, Masterson said.
Hospitals are required to evaluate every patient who visits the emergency department, he said, but that does not mean they have to treat every one. Those who are stable -- who aren't in imminent danger because of their illness or injury -- could be turned away if they can't pay, he said.
"I think every hospital will be in that position," Masterson said. "So that is certainly a philosophic change for us, in the mission that we provide to the community.
"And that is a point of survival. It's not a choice. It's not a preference. It's a matter of surviving."
Half of Sampson Regional's annual bad debts, which total more than $7 million a year on a $60 million budget, are from emergency room patients, said Jerry Heinzman, the hospital's chief financial officer.
Heinzman said the state's pending decision to reject additional Medicaid money will cause Sampson Regional to lose $2 million that it would have used to help cover the patients' bad debts.
And the decision is expected to cost the hospital additional Medicaid money that was intended to make up for other federal cuts to Medicare that are part of the reforms in the Affordable Care Act, commonly known as Obamacare.
Republican lawmakers say they have good reason to reject the Medicaid money, which was intended to put 500,000 uninsured people on Medicaid so that hospitals will have fewer debts to write off for nonpayment.
North Carolina's Medicaid system is broken, said state Rep. John Szoka, a Cumberland County Republican.
A recent audit of the program found mismanagement of tens of millions of dollars and budget overruns that totaled $1.4 billion since 2009.
"You simply do not add on to a house that is falling apart," Szoka said in a letter to The Fayetteville Observer.
Rep. David Lewis of Harnett County, the only Republican lawmaker to oppose the plan to reject the Medicaid money, said his colleagues want to put the program back in order before trying to enlarge it.
Lewis said he voted against the plan because he is worried about the fiscal health of the community hospital in Harnett County.
Republicans raised other concerns about the Medicaid expansion money:
Although the federal government promises to pay 100 percent of the extra cost at first, then scale back to 90 percent by 2020, there are no guarantees that it will keep that promise.
If the federal government breaks its promise, North Carolina could get stuck with a big expense, said Rep. Jamie Boles of Moore County.
The federal money adds to the nation's debt and will create expenses in North Carolina, Boles said. "We need to get control of both our state and federal spending, and we all need to live within our means," he said.
Democratic U.S. Rep. David Price of the 4th District said North Carolina will make a mistake if it rejects the Medicaid money. North Carolina taxpayers will end up paying for people's health care in other states, he said.
In North Carolina, health care costs will rise, leading to a 2 percent increase in health insurance premiums, he said.
Congress could decide to cancel the pending Medicare and other cuts that the hospitals say will hurt them, but Price thinks that is unlikely.
Republican U.S. Rep. Renee Ellmers of Harnett County said she tried to help the hospitals when she supported legislation to repeal the health reform law. The Senate refused to consider the bill, and the president promised to veto it.
Staff writer Paul Woolverton can be reached at firstname.lastname@example.org or 486-3512.
Copyright 2013 - The Fayetteville Observer, N.C.