Health systems nervous as Medicaid redeterminations threaten shaky bottom lines

By Alex Kacik and Caroline Hudson / May 1, 2023

Health systems are nervously awaiting Medicaid redeterminations as the process will remove millions of people from government-backed insurance plans and shrink providers’ bottom lines.

Through the COVID-19 pandemic, the federal government allowed people to remain on Medicaid even when their income should’ve excluded them from the program. The decision benefited providers, which saw fewer uninsured patients, and insurers that have large contracts with states to administer Medicaid coverage.

States started redetermining Medicaid eligibility April 1. As a result, up to 14.2 million people, or 13% of all enrollees, are expected to lose benefits, according to estimates from KFF. About a third of those will turn to the Affordable Care Act exchange marketplaces, the left-leaning think tank Urban Institute projected. Others may transition to employer-based plans or remain uninsured altogether.

To dull the impact, health systems are creating strategies to reach affected enrollees before coverage runs out, particularly the most vulnerable populations, and debating what the changes could mean for reimbursements and safety-net support.

"Even if everything goes perfectly, we’re going to have patients who are going to lose insurance coverage. That’s unavoidable,” said Matt Harvey, interim executive director of Integra Community Care Network, part of Care New England Health System. “Then, of course, there’s the unknowns — how many and when and what’s going to go wrong.”

Getting the word out

Health systems are putting together communications plans to inform patients of possible changes to their coverage. However, systems have limited information on whose coverage may end, and much of the reenrollment process is ultimately up to the patients.

Certain states automate parts of the reenrollment process, while others require more documentation. Reenrollment can take as little as two weeks or drag out over several months.

With so many unknowns, systems are forced to stick with general messaging, instead of tailoring messages to make them more effective for particular groups. Maintaining the same level of urgency with communications will be another challenge as months pass, Harvey said.

Addressing a patient’s coverage loss is often reactionary. At Providence, Rhode Island-based Care New England, employees can see when a patient loses coverage via a provider portal, but by that point, coverage has already ended, Harvey said. Care New England is hoping to partner with health plans to obtain lists of patients up for reenrollment.

Some health systems, such as Duluth, Minnesota-based Essentia Health and its 14-hospital network across Minnesota, Wisconsin and North Dakota, are hiring third-party companies to help them contact patients about the changes and streamline the reenrollment process.
 
“We have hired a vendor to help us with outreach and additional vendors to help us in our [disproportionate share hospital] reporting and data scrubbing,” Wilson said. “Every little bit helps. Most of our patients don’t recognize that they do have to reenroll now. If they have moved, even within the state, they may have to take a different approach to reenrolling.”
MetroHealth, a safety-net system based in Cleveland, has been meeting weekly with representatives from the Ohio Department of Job and Family Services and fellow Cleveland-based systems Cleveland Clinic and University Hospitals to get Medicaid beneficiaries reenrolled.

There is a running list of so-called “fall out files,” comprised of Medicaid beneficiaries who will not be automatically reenrolled, said Jennifer Davis, vice president of revenue cycle at MetroHealth. The system then sends out text messages, phone calls and letters to help patient reapply.

It also has programmed its electronic health system to cue employees to ask patients during the scheduling and check-in process whether they know about looming coverage changes and show them how to reenroll.

MetroHealth, Cleveland Clinic and University Hospitals also are attending community events like job fairs to help get the word. 

“Medicaid is our largest payer mix. This change has been a huge focus [for] us. We started working on it last year,” Davis said. “We’re taking the stance that it doesn’t matter what hospital you go to, we just want to get you back on Medicaid so you get the benefits you need.”

Systems including Renton, Washington-based Providence and Oakland, California-based Kaiser Permanente have also reached out to Medicaid patients during their visits, digitally, via phone and through letters. The process, though, is tricky for health systems that span multiple states, especially when patient directories aren’t updated with current contact information. Providence, for instance, designs social media campaigns for each state Medicaid program, such as DenaliCare, Alaska’s state Medicaid program. 

Haley Maier, director of strategic partnerships and initiatives at Providence, said the health system taps into its community health workforce, which has the training and education to support outreach in underserved areas, such as rural areas with no internet access.

Kaiser Permanente expects about 195,000 of the 1.3 million Medicaid beneficiaries covered under its health plan to lose eligibility or have trouble reenrolling. It is working with the eight states it operates in and their respective Medicaid agencies, each of which reviews Kaiser’s messaging to ensure they are using the right language and meet certain regulatory requirements, said Shannon McMahon, its executive director for Medicaid.

Preparing for fallout

Systems are also watching how redeterminations could affect reimbursements and government support for safety-net hospitals.

Two of Essentia’s hospitals—St. Joseph’s Hospital in Brainerd, Minnesota, and its Fargo, North Dakota hospital—operate near the required threshold and may lose their 340B drug discount eligibility. That eligibility allows hospitals to buy discounted drugs if at least 11.75% of their expenses are dedicated to low-income patients. Hospitals could lose millions of dollar in savings as patients lose Medicaid coverage.

About $15 million would be shaved off the health system’s bottom line if both hospitals lose eligibility, said Melanie Wilson, its senior vice president of revenue services. “When you are a health system like ours that operates on razor-thin margins, the 340B program can keep you in the green or bump you into the red,” she said.

Essentia is trying to become more efficient via automation and other technology as it prepares to treat more patients without insurance. In the meantime, it would help if Congress gave hospitals a grace period regarding 340B, allowing hospitals to temporarily still qualify for the program even if it doesn’t meet the threshold, Wilson said.

People who lose coverage may qualify for charity care, but many patients without insurance or with high-deductible exchange plans will have to pay for treatments out-of-pocket. Health system administrators are concerned some will defer care or drop out of the system altogether. On the operational side, systems are bracing for their charity care and bad debt levels to increase, which would dent their bottom lines.

“We are trying to put other programs in place, like programs to increase the commercially insured population to help offset the loss that we are going to experience from these patients,” MetroHealth’s Davis said.

Tammy Trovatten, director of government reimbursement at Sacramento, California-based UCDavis Health, said an estimated 2 million to 3 million patients may lose benefits from Medi-Cal, California’s Medicaid program. The system doesn’t know how lost coverage will be distributed across counties, she added.

Trovatten said UCDavis may redirect some staff members to focus on redeterminations. The health system is trying to determine whether it needs more staff, such as call center representatives or financial assistance teams, to help patients navigate the process. Another question is whether UCDavis can support those additional employees once redetermination ends.

“We never want to be in the position where we bring someone on just to let them go,” Trovatten said.

UCDavis is factoring possible decreases in Medi-Cal reimbursements into its current budget process. The hope is, if a patient is no longer eligible for Medi-Cal, they may qualify for a health exchange plan at a discounted price or for an employer-based plan, Trovatten said. 

Another factor complicating matters is Medi-Cal’s ongoing expansion plans. As of May 2022, adults 50 years or older can qualify for “full scope” access to Medi-Cal benefits, regardless of immigration status. In 2024, eligible individuals aged 26 to 49 will gain full access, regardless of immigration status, including those who aged out of the pandemic-era expansion that covered young adults.

Care New England’s Harvey said the system is trying to determine how much of a leadership role it should take with redeterminations—should it staff up to offer more resources, or should it form collaborations with other organizations already doing that? He said those questions won’t be answered until redeterminations are further along.