published Monday, January 21st, 2013

7 Chattanooga-based hospitals stand to lose $400 million

L to R: Erlanger Hospital, Memorial Hospital, Parkridge Hospital.
L to R: Erlanger Hospital, Memorial Hospital, Parkridge Hospital.

Reductions

Under the federal Affordable Care Act, Tennessee hospitals will lose an estimated $4.26 billion over nine years in special federal reimbursements for free care they provide. Here is what Chattanooga-based hospitals will lose:

Erlanger Health System: $149.53 million

HealthSouth Chattanooga Rehabilitation Hospital: $8.35 million

Kindred Hospital: $5.74 million

Memorial Health Care System: $135 million

Parkridge Medical Center: $89.83 million

Parkridge Valley Hospital: $297,800

Siskin Hospital: $4.57 million

Source: Tennessee Hospital Association

NASHVILLE — The next nine years could prove tough financially for Chattanooga-based hospitals because of changes in federal reimbursements for patient care under the Affordable Care Act, an industry analysis projects.

Seven hospitals collectively stand to lose nearly $400 million in special Medicare and Medicaid reimbursements through 2021, according to Tennessee Hospital Association figures obtained by the Chattanooga Times Free Press.

The special payments are intended to compensate hospitals for the free care they provide to the uninsured. Hospitals have been counting on making up most if not all of the reductions by covering the uninsured through health insurance exchanges or an expanded Medicaid program.

Gov. Bill Haslam hasn't said if he will expand TennCare, the state's Medicaid program, to take in an estimated 182,000 low-income Tennesseans. The federal government would pick up the full cost of the expansion for the first three years, dropping to 90 percent in 2019 and thereafter.

Haslam has said expanding the program to cover people whose incomes are at 138 percent of the poverty level ($30,843 for a family of four) would be beneficial, but he has concerns over inflation and potential future cuts in the federal match.

TennCare officials estimate the state's cost at $200 million for the first 51/2 years and about $100 million a year afterward. Combined with federal matching funds, that would mean $1 billion annually for hospitals.

Haslam has said he'll let the federal government, rather than the state, get the health insurance exchange up and running next year.

Figures unclear

It's not clear exactly how much Chattanooga and other Tennessee hospitals would recoup from newly insured people under the exchanges, said David McClure, the Tennessee Hospital Association's senior vice president of finance.

Hundreds of thousands of Tennesseans would get coverage through the insurance exchange, which gives tax credits for individuals and families who earn less than 400 percent of the federal poverty level, about $92,000 for a family of four.

McClure said that when the national hospital industry agreed not to fight President Barack Obama's initiative, "the entire plan was that these [reimbursement reductions] would be given up on the front end and either the Medicaid expansion or the health care exchange would offset" the loss.

The THA calculates that the federal reimbursement cuts over the nine years will cost Chattanooga-based hospitals $393.41 million through 2021. Hospitals across the state would lose an estimated $4.26 billion, the THA figures show.

THA President Craig Becker has warned that some hospitals face closure without the Medicaid expansion and that rural hospitals will be hardest hit. The Tennessee Justice Center, an advocate for expanded health coverage, calculates that 21 hospitals could face closure. None is in Chattanooga.

Offsets from expansion

Erlanger Chief Financial Officer Britt Tabor emphasized in a statement that the THA estimates "reflect only the decreases in Medicare and Medicaid associated with" the Affordable Care Act.

"They do not include the positive offsets from the expansion of the Medicaid program, and the establishment of exchanges which would impact our current uninsured population.

"For the Erlanger Health System, this would be a significant positive number to offset the decreases," he said.

It would "not be positive" if Tennessee decides not to expand TennCare, Tabor said. On the other hand, some of the ACA cuts are based on Medicaid expansion.

"If Medicaid expansion does not occur, then some of the ACA cuts would likely not go into effect," he said.

But there's no guarantee that would happen.

Memorial President and CEO James M. Hobson said in a statement that health care providers must "remain focused on providing patients with a coordinated care pathway that provides the highest quality care at the lowest cost."

Siskin President and CEO Robert Main said the hospital is at a disadvantage now, already losing out on some types of Medicaid reimbursements.

Hospitals face other money woes down the pike.

An automatic 2 percent federal cut for hospital reimbursements triggered under the Budget Control Act of 2011 would cost Tennessee hospitals $767.58 million, industry projections show. The seven local hospitals collectively would lose $74.71 million.

And Congress is considering Medicare cuts that would impact Tennessee hospitals by some $2.1 billion, according to Tennessee Hospital Association estimates.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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