Why hospitals could be facing millions of newly uninsured patients this year

As the end to the nation's COVID-19 public health emergency looms, hospitals and health systems are prepping for an unprecedented period — the unwinding of federal policy that led to a complete transformation of care delivery operations, including billing processes, patient coverage and telehealth flexibilities.

"After three years of pandemic flexibilities, the return to 'normal' will require changes across many parts of hospitals and health systems, and that work should begin now," the AHA wrote Feb. 7. 

Though no longer officially attached to the PHE's end date of May 11, many hospital leaders say that Medicaid redeterminations are one of the most impactful changes occurring this spring. Starting April 1, states will resume determining who is and is not eligible for Medicaid, leaving up to 18 million people nationwide without health coverage. 

The redetermination process threatens the nation's record low uninsured rate of 8 percent and presents hospitals with the possibility of millions of newly uninsured patients, along with those that delay care and only visit the hospital during emergency situations. 

At UMass Memorial Medical Center in Worcester, President Michael Gustafson, MD, said the system is increasing the number of employees on its financial counseling team to assist patients who may see a loss of coverage.

"This is a substantial amount of work that needs to be done," he told Becker's. "We are staying current with all communications from MassHealth [Medicaid], Mass Hospital Association and CMS. We are also working to identify patients who will be part of the MassHealth redetermination process and developing both targeted and broad communications to inform them of potential changes to their plans."

The nation has been under continuous Medicaid/CHIP enrollment since early 2020, which raised total enrollment by 20.2 million through October 2022 — a more than 28 percent increase in the program. In December, Congress decoupled the PHE from the continuous enrollment provision, allowing states to move forward with redeterminations starting in April. In return for pausing disenrollments during the pandemic, states have received a 6.2 percent boost in federal funding for Medicaid, a policy that will be slowly phased out.

For rural hospitals that rely on Medicaid funding to serve low-income patients, the end of continuous enrollment is a dire situation.

"We are all being forced to try to eke out a sustainable margin because of those [inflation] factors,” Donald Lloyd, CEO and president of St. Claire HealthCare in Morehead, Ky., told States Newsroom Feb. 21. "And then with the potential loss of reimbursement for those who did qualify, that’s just going to add an additional layer of burden upon rural institutions."

Mr. Lloyd told the publication that he expects more than 3,000 people to lose coverage in the area where St. Claire operates, a result that could leave the hospital with $5 million less in annual Medicaid funds. The facility has slowed capital investments and is reprioritizing certain growth projects in anticipation of the revenue loss.

"… It’s just a matter of economics and even though in some states the gap between the actual cost of care and the Medicaid reimbursement is very significant, at least it does offset some of the expense of operations," he said.

Across the country, 631 rural hospitals, or more than 29 percent nationwide, are either at immediate or high risk of closure. On Feb. 28, President Joe Biden spoke about rumored Republican proposals to cut federal Medicaid spending, saying that any reductions threaten "an already fragile rural hospital system," according to The New York Times.

"Communities depend on these hospitals," he said. "Not getting Medicaid would shut many of them down."

States have about a year to complete the redetermination process, though some are pushing to complete it in half the time. The Inflation Reduction Act extended ACA premium tax credits through the end of 2025, which will allow some Medicaid enrollees to regain coverage through the federal or state marketplaces. In the meantime, 64 percent of Medicaid members or those with family enrolled say they have heard nothing about upcoming redeterminations as of December.

For states with a federal marketplace, individuals who lose Medicaid coverage will have until July 31, 2024, to sign up for an ACA plan, according to CMS.

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