Crossville Chronicle, Crossville, TN

January 9, 2013

CMC to see cuts to federal payments for charity, uninsured care services in 2014

By Heather Mullinix
Assistant editor

CROSSVILLE — Cumberland Medical Center provides about $6 million in medical care for the uninsured, indigent and others. In 2014, payments that help cover a portion of those costs could be cut under the Affordable Care Act (ACA), and one way to help the hospital absorb those cuts is through an expanded state Medicaid program, providing those earning up to 138 percent of the federal poverty level with health coverage.

"The Affordable Care Act says the federal government will incrementally reduce the federal payments to hospitals known as disproportionate share payments," said Larry Moore, chief financial officer and interim chief executive officer. "The law anticipates that increased access to both Medicaid and private insurance will reduce the amount of uncompensated care to hospitals."

The ACA provides for the expansion of state Medicaid systems, known as TennCare in Tennessee, to provide medical coverage to all individiuals with incomes below 138 percent of the poverty level, which is $30,843 for a family of four. Under the legislation, the federal government would pay all the costs of an expanded Medicaid program, at first. States would be responsible for 10 percent of the expanded program by 2019. In July, the U.S. Supreme Court ruled states could not be forced to expand their Medicaid programs, and a handful of states have announced they will not choose to expand Medicaid eligibility. Tennessee is among a handful of states that have not yet determined how it will proceed.

"The ACA assumes each state will open their rolls for Medicaid," Moore said.

Moore said CMC received about $1.6 million in disproportionate share funds in 2012 to help compensate it for providing care to the uninsured and indigent. CMC provided $2.9 million, at cost, charity care in 2012. That includes care for those who asked the hospital for assistance with the cost of their care and were classified as charity care.

"Some people are proud and they don't want to ask for help," Moore said. "Unfortunately, they may not be able to afford the cost of their care. That becomes bad debt."

CMC recorded $3 million in bad debt last year.

"From a hospital perspective, I'm all for the governor expanding the Medicaid rolls," Moore said. "If we get our disproportionate payment reduced, and we still have to contribute this charity care and absorb this bad debt, we're just adding another $1.6 million..."

Moore notes there are many things that must be considered by state leaders before making a decision on the issue, however, including the additional costs which some studies have found could reach as high as $1.2 billion.

In Tennessee, 930,000 people, 14.7 percent of the population, are uninsured, according to estimates from the U.S. Census Bureau. Twenty-five percent of the state's residents are already eligible for TennCare, according to state officials, and an expanded program would extend coverage to up to 300,000 more poor and low-income people.

Moore said CMC tracks Cumberland County patients admitted for hospital care, regardless of where they are admitted, and that number is down since 2010.

"That tells us patients are deferring or postponing some of their elective procedures," Moore said. "That could be a good thing or it could be a bad thing because it could be a chronic problem that becomes emergent, which is not good for the patient. But, when you've lost your job and don't have insurance, people are concerned about how they afford care."

As Gov. Bill Haslam and the Tennessee General Assembly consider action on expanding Medicaid in the state, the health industry is struggling with a shortage of primary care physicians. It's one of the issues of access to care identified in Cumberland County last spring during a community needs assessment.

"We're currently recruiting primary care physicians to Cumberland County," Moore said, adding a physician specializing in internal medicine and infectious disease was scheduled to locate to Crossville this summer. The hospital is also talking with other primary care physicians.

"We contracted with search firms to help us identify appropriate physicians for this area. Crossville has a lot to offer in terms of lifestyle, and this is a great place for someone to locate their practice. We're looking to help them be successful however we may do so."

With questions still abounding regarding implementation of ACA, the future of the health industry has some uncertainty. That's one reason CMC is continuing to study a possible partnership or merger with Covenant Health. Covenant Health includes seven acute care hospitals in East Tennessee and numerous organizations, including the Patricia Neal Rehabilitation Center, Thompson Cancer Survival Center, Peninusula, Covenant Medical Management Inc., and Covenant HomeCare. However, a decision has not been reached.

"It has to be a good business fit for Covenant and for us. And, it has to be a win-win for both parties or it doesn't work for anyone," Moore said. "It's still early, early, early stages of having talks."

Moore said no agreements have been reached, despite rumors in the community to the contrary.

"Given all the uncertainty in the health care environment — it's incumbent on our board and administrative officers, we have a fiduciary responsibility to provide the best health care services possible," Moore said. "It doesn't hurt to investigate, and that's what we're doing."