One of the main arguments for expanding Medicaid in Mississippi has been that it would help the state’s hospitals offset the cost of providing uncompensated care.
When this argument was first made a decade ago, Medicaid reimbursements did not cover the actual cost of treatment. Regardless, the logical conclusion was that it was better to get 85% on an insured patient than zero on an uninsured one.
The math, though, is even better now, thanks to a change in how Mississippi’s Division of Medicaid calculates supplement payments under a plan known as the Mississippi Hospital Access Program (MHAP). Medicaid patients have become arguably the most valuable patients a hospital treats, even more so than the “prized” commercial payers.
Confused? You should be. The health care reimbursement system is exceedingly complicated. You almost need an advanced accounting degree to understand it.
Here is a simplified explanation of what transpired.
Last year, when Mississippi’s rural hospitals were in a major financial crisis, Gov. Tate Reeves — in the heat of a tough re-election battle in which rural health care was a top issue — advocated for a plan to make MHAP payments more generous. This was in lieu of straightforward Medicaid expansion, which the hospitals wanted but which the Republican incumbent had long been stridently against.
Under the change, which received the federal government’s approval, MHAP payments — which come on top of regular Medicaid reimbursements — would be benchmarked against the average national commercial rate. Previously they had been benchmarked against the average Mississippi commercial rate and before that against the Medicare rate. Because the average national rate is so much higher than what commercial insurers pay in Mississippi, the change meant roughly an extra $750 million a year for the hospitals, even after they coughed up higher bed taxes to cover the state’s share of the cost.
It has been a beautiful arrangement for everyone involved. For every dollar the hospitals pay in extra taxes, they get about four dollars in return. And Reeves can claim credit for saving rural health care without burdening the state’s taxpayers.
It also does something that Reeves is unlikely to acknowledge. It strengthens the case for Medicaid expansion.
Even before enhanced MHAP, adding 200,000 to 300,000 of the state’s mostly working poor to the Medicaid rolls was a no-brainer. A billion dollars of extra federal money a year, thousands of new jobs created in the health-care industry, and peace of mind and better health to those who don’t get insurance at their workplace are difficult to oppose unless you are a hard-hearted ideologue.
It makes even more sense now.
Richard Roberson, president and CEO of the Mississippi Hospital Association, put it this way during a talk he gave on Thursday in Greenwood: “Medicaid, from a hospital perspective, has really become as good if not better of a payer than Blue Cross Blue Shield.”
How long that remains so will depend on the federal government’s continued good graces. The enhanced MHAP program requires a yearly waiver from the Centers for Medicare and Medicaid Services, and the current arrangement is only guaranteed through June 30, 2025. Since some other states, however, have also gotten this waiver, and since it has proven to be a lifesaver for many hospitals, it would be difficult for Washington, no matter which party is in the White House, to pull the plug on it.
About 10% of the population in Mississippi is uninsured. Adding a chunk of this to the Medicaid rolls is the best option out there.
