Grady could have big loss in Medicaid stand-off

After years of struggling to climb out of huge deficits and make a modest profit, Grady Memorial Hospital is bracing for a possible $45 million blow that could jeopardize its ability to provide critical care to thousands of uninsured Georgians.

Starting in 2014, the federal government plans to cut in half over five years an $11 billion program that helps safety net hospitals such as Grady — many located in some of the nation’s poorest urban neighborhoods — defray the cost of caring for uninsured patients.

It was assumed the expansion of Medicaid called for by the Affordable Care Act would offset the loss by assuring health coverage to millions of poor, previously uninsured Americans that would at least partially pay for their care. But the U.S. Supreme Court’s June ruling on state challenges to the law made the Medicaid expansion optional for states.

The Catch-22 has left hospital officials in states that don’t plan to expand Medicaid - including Georgia - fearing they will face the cuts while still treating huge numbers of uninsured patients.

Gov. Nathan Deal has said Georgia simply can’t afford to expand the massive government health care program as it is now structured.

State and federal lawmakers are aware of the problem, but so far no one has stepped up with a credible solution.

“It’s a big game of chicken,” said Bruce Siegel, president of the National Association of Public Hospitals and Health Systems. “We could see the worst of all possible worlds.”

Fewer federal funds from what’s called the “disproportionate share hospital”, or DSH, program could be the difference between life and death for some hospitals, Siegel said. In fiscal 2012, Georgia hospitals received $416 million from the program — more than half of it from the federal government. It’s not yet clear how much of that money will disappear. Grady, which received $91 million in DSH funds last fiscal year, projects it will lose about half of that.

Nationwide, the association estimates hospitals would be left with $53 billion more in uncompensated care costs than originally expected under the health law if states forgo Medicaid expansions.

The cuts are the latest in a string of financial challenges that hospitals face, including new penalties from Medicare for not hitting certain quality standards. It’s also unclear whether the state Legislature will renew a provider tax, which generates hundreds of millions of dollars that are doled out to hospitals with large numbers of Medicaid patients.

Now, hospitals are scrambling to eke out savings by eliminating duplicate testing, partnering with other providers, and reducing patients’ length of stay among other efforts.

Grady, which expects to make a $10 million profit this year, has focused heavily on helping patients who may currently qualify for Medicaid to sign up for the program. Hospital officials project it will provide roughly $235 million in free care for the poor and uninsured this year.

The DSH program is the only way Grady can even come close to breaking even, CEO John Haupert said. Without that money, the hospital would be forced to cut services, Haupert said.

If Grady had to cut mental health services, for instance, it would be devastating to the community, affecting jails and other institutions, he said.

“At the end of the day, we have to make Grady work,” he said. “There’s no easy decision there.”

The issue isn’t just caring for the uninsured, Siegel said. It’s also the stability of these hospitals, which run trauma centers that everyone — not just the poor — depends on, he said.

"Because of them, I'm alive," said Jamie Kleber, a Sandy Springs attorney who six years ago found herself fighting for survival in Grady's intensive care unit after a car wreck triggered when a mattress fell off a car ahead of hers.

The right side of her body was shattered – her pelvis, ribs, hip and leg. She had a collapsed lung and spent a week in and out of surgery with doctors painstakingly pulling shards of glass out of her body.

People don’t know they need a hospital like Grady that’s prepared to handle major traumas until catastrophe hits, said Kleber, 46, who is now recovered.

Hospitals with trauma centers have extra expenses many hospitals don’t that they lose money on, such as paying trauma surgeons to be on duty 24 hours a day whether or not they’re needed, said Bryan Forlines, reimbursement director for Central Georgia Health System in Macon.

“There are just a lot of costs that people simply don’t appreciate,” Forlines said.

In Massachusetts, Boston Medical Center — one of the state’s largest providers of health services to the poor — lost millions of public dollars when the state’s mandatory health insurance law took effect, said David Hefner, CEO of Georgia Health Sciences Medical Center in Augusta. It was assumed that hospitals would no longer need those extra dollars since more people would have coverage and be able to pay for care. But the newly-insured had coverage that ended up paying providers less than the actual cost of care.

“That institution almost collapsed,” Hefner said.

Hospitals officials across the country fear a similar scenario if DSH cuts go into effect without a new source of funding and are voicing their concerns to federal and state lawmakers in hopes of finding a solution.

The Supreme Court’s ruling fundamentally changed the Affordable Care Act, and Congress has to address that, said Matthew Hicks, vice president of government relations at Grady.

Haupert said Grady will have to look at what services to cut if the money isn’t there.

“Grady would no longer be able to afford to be all things to all people,” he said.