Medicaid expansion didn't improve critical access hospital operations

LISA GILLESPIE / December 07, 2021

The expansion of Medicaid hasn't made critical access hospitals any more financially stable or better for patient care than hospitals in non-expansion states.

A new study in the December issue of Health Affairs found these hospitals did not experience improved quality scores or better staffing levels overall as compared as compared to critical access facilities in states that didn't expand the insurance program.

"These findings support the argument that although Medicaid expansion may have had benefits for some hospitals, it is not a panacea for all of the challenges facing hospitals serving rural and underserved communities," study authors wrote.

About one-third of U.S. hospitals have been designated as critical access by the federal government, which means they have fewer than 25 beds and are located more than 35 miles from the nearest hospital. Of the 1,158 critical access hospitals in the study, almost 60% were in states that expanded Medicaid to a greater portion of residents.

The study showed there weren't big differences between the amount of uncompensated care these hospitals had, in either kind of Medicaid state. And they saw a very small increase in operating margins of 1.3% overall, which researchers deemed as not significant.

"This increase in covered lives in Medicaid expansion should theoretically drive these hospitals to be more profitable, or at least start to break even, but they also have to have a lot of very expensive technology or services that frankly, don't really get utilized that much," which are independent factors that might not be offset by an increase in Medicaid payments, said Jeff Myers, senior vice president of market access and reimbursement strategies at Catalyst Health Care Consulting. "Critical access hospitals are by their nature away from everything else, and have a very limited population of usage that doesn't allow them to spread those fixed costs over a lot of people."

Researchers also looked at Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), which mostly measure patient satisfaction, and heart failure and pneumonia readmission and mortality rates. Hospitals in states that expanded Medicaid had nearly identical scores on all measures as hospitals in non-expansion states. Leah Binder, president of not-for-profit The Leapfrog Group, said improvements in these areas usually are driven by more direct efforts by payers and hospital leadership to improve quality, vs. simply having more insured patients.

"To truly improve quality and safety, hospitals need strong leadership focused on quality, plus a passion for keeping patients safe and putting patients first; if Medicaid or other funding rewards that kind of excellence, we will see real improvement in the quality of care those hospitals deliver," Binder said, but added that more attention needs to be paid to critical access hospital quality and safety, which are often exempt from national measurement programs.

Study authors also opined that critical access hospitals generally provide care to patients that have less access to primary care, and in communities with greater social determinants of health challenges.

Congress is currently considering the Build Back Better Act, which would increase healthcare subsidies and extend Medicaid-like coverage to low-income earning residents in states that chose not to expand Medicaid. But hospital groups have expressed concern that doing so wouldn't necessarily benefit hospitals in those 12 remaining states that didn't expand.

The data on critical access hospitals came from the Healthcare Provider Cost Reporting Information System from the Centers for Medicare and Medicaid Services between 2011 and 2018.

Other studies that looked at the impact of expansion on hospitals have found financial gains overall, but didn't hone in on critical access hospitals alone.