CPH brass eyes Parnell's Medicaid expansion decision

Davis takes active role, hopes Parnell sees benefit to hospital, community in expansion

Although Alaska Gov. Sean Parnell is opposing an expansion of Medicaid under provisions of the Affordable Care Act, an official with Central Peninsula Hospital is optimistic the governor will change his mind.


Rick Davis, CPH Chief Executive Officer, recently has taken an active role in the Medicaid expansion discussion by visiting with Parnell in Juneau last week and by talking about the issue at a Soldotna Chamber of Commerce lunch this week. Davis contends such an expansion would benefit the hospital’s finances and the community’s health in the long term.

“From the hospital’s perspective it is going to help us financially to help cover some of the bad debt and charity care for people without coverage,” he said. “From a compassionate perspective, it is going to be good for the people who don’t have any coverage to get some. It will allow them to access preventative care and primary care.”

The federal government’s health care reform law seeks to make care more affordable, more accessible and switch the health care industry’s financial incentives away from a quantity-based structure to a outcome-based system focusing on quality and patient satisfaction, Davis said.

The Medicaid expansion fits into the increased accessibility goal, he said.

Various estimates indicate the expansion would give coverage to an additional 32,000 to 40,000 uninsured Alaskans that either make too much money to be on Medicaid, but not enough to buy insurance, or otherwise don’t meet the program’s standards.

About 20 percent of CPH’s business is Medicaid patients, Davis said. Medicare patients account for 40 percent; regular insured patients combine for 30 percent; with the remaining 10 percent split between bad debt and charity care rolls.

If Medicaid were expanded — increasing eligibility up to 138 percent of the federal poverty line — CPH estimates there would be 3,200 new enrollees on the Peninsula based on a projected state total of 40,000 new enrollees.

In 2012, a total of 12,090 Peninsula residents were eligible for Medicaid. There were 149,094 total Medicaid enrollees in the state that year, indicating 8.1 percent of the state’s Medicaid patients live on the Peninsula.

Along with the Alaska State Hospital and Nursing Home Association, Davis met with Parnell, who has until the end of this year to make a final decision on the expansion. Davis said he was not surprised by Parnell’s position and said he felt the governor was wise to take his time and make an examined, informed decision.

Reports filed Thursday indicated Parnell opposed the expansion — he would not request funding or authorization for the expansion from the Legislature this session — as he is worried about the state of the federal government and its solvency.

“He made it pretty clear that he was not ready to make a decision and probably would not have time to fully vet the issue during the (legislative) session this year,” Davis said of Parnell. “He stated that he had until the end of the year to make this decision and he was going to take as much time as he felt necessary.”

In many ways Medicaid payments are tied to Medicare rates, Davis said. Hospitals made a deal, of sorts, in the ACA to accept declining Medicare payments knowing they would see more revenue from people covered by Medicaid.

“We fully anticipate overall payments to drop, but we were hoping that the increased Medicaid expansion would help backstop that drop a little bit,” Davis said.

The hospital has already taken cuts to Medicare reimbursements that came from fiscal cliff negotiations at the first of the year.

In total the hospital saw, and will continue to see, $2.6 million less per year in Medicare funding per fiscal year from two sources — transitional outpatient payments, which decreased by $1.6 million per year; and the $1 million per year outpatient clinic lab subsidy for rural areas, which was eliminated.

“As Medicare payments start to drop off, the hope is that the Medicaid expansion would include people who are now on our bad debt and charity care rolls so that we would see our charity and bad debt numbers decrease to help offset the Medicare cuts,” Davis said. “A zero sum game would be great, but I don’t think that would be likely.”

Moreover, Davis estimated that not participating in the Medicaid expansion would work against the ACA’s goal of reducing health care costs. The current high cost of health care, he said, is partially contributed to by patients entering the system through the emergency room and not the doctor’s office.

Those uninsured residents not on Medicaid have very limited access to primary and preventative care, tend to become more sick and lean on the existing system to absorb a high-cost patient.

“So when their chest hurts they are not going in to see their primary care doctor for a cardiology referral and to get (medicated),” Davis said. “They come to the ER, we take care of their immediate needs, but we are not able to provide those preventative and primary care services.”

Moreover, not expanding Medicaid could have unintended consequences on areas with numerous small businesses like the Kenai Peninsula.

Davis said that as part of the health care law, small business owners will be required to have employees with health insurance, which means they either purchase that insurance for employees, have those employees covered by Medicaid, or pay a fine typically less than the cost of insurance.

If expanded, more low-wage workers would qualify for Medicaid taking pressure off small businesses, Davis said.

“There will be businesses that probably can’t afford a penalty for all their members and can’t afford to provide insurance,” he said. “Either they will have fewer employees or they won’t be able to function.”

Brian Smith can be reached at brian.smith@peninsulaclarion.com.