Obamacare: An uneven playing field for hospitals

AP

At Parkland Memorial Hospital in Dallas, the push is on to get patients insured under Obamacare plans.

Since Thanksgiving, there's been a line outside of the hospital's enrollment center every morning when the doors open at 7. With the HealthCare.gov website now working better, the hospital is helping more than 100 people a day look over and enroll in plans.

"We've reached out to 22,000 of our patients," said Marian Morrow, Parkland's patient financial service manager, in the crowded enrollment office.

In 2012, Parkland provided $685 million in uncompensated care for its mostly uninsured patient population and for those who are underinsured. Yet under the Affordable Care Act, the hospital could still find itself in the red next year.

"About a third of our revenue comes from federal payments," said Ted Shaw, Parkland's interim chief financial officer. "If we don't have those revenues, we can't fund the programs they support."

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Non-expansion losses

Under the ACA, federal payments to hospitals will be cut starting in 2014 on the expectation that more of their patients will be covered by insurance. That may be the case in states that have opted for the Medicaid expansion program, which extends Medicaid coverage for individuals and families earning up to 138 percent of the federal poverty level, roughly $15,856 for a single adult and $26,951 for a family of three.

Texas is among two dozen Republican-led states that have rejected Medicaid expansion, after the Supreme Court ruled that the Obama administration could not force states to adopt the program.

"By not expanding Medicaid, I estimate that it is costing Parkland about $30 million a year, starting next year," said Shaw, due to lower federal reimbursement and the likelihood the hospital will continue to see patients who don't earn enough to pay for insurance.

A study by the nonpartisan Commonwealth Fund estimates that by 2022, taxpayers and providers in states that opt out of Medicaid expansion will lose out on billions in federal funding.

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The researchers calculated the move would cost Texas more than $9.2 billion. Florida, where Dade County has the nation's highest rate of uninsured patients, would see a net loss of $5 billion by not adopting Medicaid expansion.

Obamacare plan limitations

For patients who would otherwise qualify for the Medicaid expansion coverage, the lowest-priced plans on HealthCare.gov could still prove costly, even with federal subsidies that in some cases fully cover the cost of monthly premiums.

Private physicians like Dr. Roger Khetan worry that many of those low-premium plans will leave patients underinsured, because they come with high out-of-pocket costs for things like lab tests and MRI screenings.

"Once you give them their preventive care, if there's an abnormal lab, an abnormal finding, what is the follow up?" Khetan asked. "Is it going to be covered by that insurance company?"

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At the Mission East Dallas clinic in nearby Mesquite, staffers have been helping their mostly uninsured patients learn how to enroll in Obamacare plans, but they have found that the most affordable plans on the exchange don't include the clinic in their networks.

The clinic is now lobbying the insurers to be included in the plans that its patients are most likely to choose.

"We are trying to get enrolled into those networks, so we'll be able to take care of the patients," said Dr. Chris Berry, a family physician at Mission East Dallas.

Berry admits this is not traditionally the way doctors' offices work.

"This is a unique moment where we haven't had to think that way before," he said.

Obamacare: Not a federal health program?

Parkland Memorial was studying a way to help its patients maintain their Obamacare coverage, by providing premium assistance to those who may have trouble making their insurance payments. It is something the hospital has done in the past with patients covered under COBRA plans.

"When patients come in and their insurance is lapsed, ... if we pay the premium for them then we actually get paid for delivering care, which tends to be more expensive than just paying the premiums.," said Parkland's Shaw. "So we recover costs that way."

They can't pay patient costs for federal health programs like Medicare. But while the Affordable Care Act is considered President Barack Obama's signature initiative, Obamacare plans are not considered a strictly federal health program.

Health and Human Services Secretary Kathleen Sebelius has determined that Obamacare plans sold on the health insurance exchanges should be treated like private plans. As a result, the plans do not fall under government health program anti-kickback statutes, which bar financial incentives to patients.

Yet, last month HHS officials strongly discouraged hospitals from trying to pay their patients' premiums, saying it could create an uneven playing field among providers, warning that the health department would take action against such payments. Parkland has since abandoned its premium-support plan.

Some health policy legal experts say hospitals can legally make a case for allowing the payments, despite the health department's determination.

"The secretary has said they're not subject to the statute. The statute requires a willing and knowing violation, " explained Kevin McAnaney, a health policy attorney who worked in the Office of Counsel to the Inspector General during the Clinton and Bush administrations.

"It's hard to understand how a violation could be knowing and willful if the secretary has told you it doesn't apply," he said.

Ironically, Obamacare gives hospitals in Medicaid expansion states an advantage over facilities in states that have opted out. In those states, a hospital that treats a patient who is uninsured but would otherwise qualify for Medicaid expansion, could sign the patient up for temporary Medicaid coverage and get reimbursed.

"It would be enormously better if we were part of Medicaid expansion," said Mission East's Berry.

Berry expects most states now opting out of expansion will eventually take up the program over the next couple of years, with the federal government committing to pay 100 percent of the cost through 2016. After that, the states will have to pick up 10 percent of the cost.

"It makes perfect sense from almost any way you look at it," he said.

—By Bertha Coombs. Follow her on Twitter @coombscnbc.