Early last month Governor Steve Bullock signed into law the Montana HELP Act (SB405) which will expand Medicaid coverage to approximately 70,000 Montanans.
The bill provides health care coverage to adults between the ages of 19 and 64 who earn up to 138 percent of the federal poverty level (FPL). For reference, 100 percent of the FPL is $11,770 for a family of one. The FPL goes up $4,160 for every family member, so 100 percent of the FPL for a family of two is $15,930, for a family of three it’s $20,090, and so on.
The new law requires the approval of the federal Centers for Medicare and Medicaid Services (CMS) since it represents a change to the existing Montana Medicaid program. That approval may not come until the end of the year.
For eligible individuals earning more than 100 percent of the FPL there will be a premium required. Failure to pay the premium will result in suspension of coverage. In addition, the plan calls for copayments with exceptions for emergency services and certain preventative care services.
The Montana HELP Act will be administered by a third-party administrator who will be contracted by the state. Part of the intent of this provision is to avoid growing state government.
How might the Montana HELP Act impact hospitals?
At least initially, hospitals should benefit financially with Medicaid expansion. Hospitals in other states that have passed Medicaid expansion laws in recent years have experienced significant increases in the percentage of patients who come to the hospital with Medicaid coverage. This means that fewer patients come to the hospital without insurance coverage, otherwise known as self-pay patients.
On average, hospitals collect 2-5 percent of charges from self-pay patients. While the amount Medicaid pays doesn’t cover the cost of care provided, it does pay better than the 2-5 percent average payment from an uninsured patient. Time will tell if future legislative action will reduce other government-sponsored health care funding to offset some of the cost of expansion.
The law also makes changes to the current Medicaid program. These changes are intended to reduce costs and improve health outcomes. This includes programs to discourage inappropriate use of hospital emergency departments in favor of lower-cost care settings such as a physician’s office or urgent care clinic.
Often patients without insurance have delayed care until they feel they have no other choice but to go to the hospital emergency room to receive care. However, in the emergency room, treatment costs are much more expensive. It is a better use of health care dollars to use preventive care measures to manage health or chronic illness, keeping people healthier, and out of the hospital.
We are watching how the process unfolds. It is anticipated that with fewer unpaid costs thanks to Medicaid expansion, hospitals, health care systems and providers can invest in resources to help coordinate care for patients. That will be a win-win situation for patients, hospitals, and taxpayers alike.
Kirk Bodlovic is Chief Financial Officer at Providence Western Montana.