Health-care providers see surge in cash-strapped patients

Local health-care providers are seeing a surge in patients who cannot pay their bills as more people lose income in the economic downturn.

The regional medical system Centra provided nearly $75 million in uncompensated care in 2008. In 2007, the amount was about $63 million.

The increase came solely because of a jump in charity care, for which Centra provides services at a reduced cost or for free, based on a patient’s income. Centra logged $39.8 million in charity care last year, a 54 percent increase from 2007.

George Dawson, president and CEO of Centra, said helping patients who cannot pay is part of Centra’s mission as a nonprofit organization. But the rising tide of uninsured patients with limited income is straining Centra’s resources, he said.

In December the health system deferred all employees’ salary increases, a move that affected more than 5,000 people in the immediate Lynchburg area. Centra also has postponed some capital projects and placed a “semi-hard freeze” on hiring, Dawson said, filling only essential positions.

At the same time, Centra and other health providers in Virginia are bracing for a possible reduc-tion in Medicaid funding, which Centra administrators say could result in millions of dollars more in uncompensated care.

About 12 percent of Centra’s patient population qualifies for Medicaid, which currently pays 75 cents for every $1 the hospital would charge. The budget Gov. Timothy M. Kaine proposed in De-cember would reduce the reimbursement to 70 cents per $1. That rate, however, depends on using $155 million in revenue from his proposed 30 cents-per-pack cigarette tax increase, a move that most lawmakers say is unlikely.

With the cigarette tax, the reduction in Medicaid funding could cost $83 million statewide, and $4.4 million to Centra, the health system estimates. Without the $155 million in revenue that the tax would provide for Medicaid, Dawson fears a $17.3 million shortfall for Centra.

“I don’t think that health care is, or should be, immune from economic downturn,” Dawson said. But “the next patient, somehow, is going to pick up some of those costs.”

Further complicating matters for lawmakers is the federal economic stimulus package passed by the House last week. It would send $1.4 billion to Virginia over a 27-month period for Medicaid, but it is unclear how that funding would be disbursed or when, or if it would ultimately be avail-able as the Senate has not yet voted on its stimulus package.

Shifting costs to paying patients, usually people with private insurance, is not an immediate step. Centra has long-term contracts with insurance companies to treat insured patients at certain costs, Dawson said. When those contracts expire, Centra negotiates a higher price.

About 28 percent of Centra’s patients are privately insured. Another 52 percent have Medicare, a federal program that insures people over age 65 and some disabled people. Medicaid, a partner-ship between states and the federal government, pays for health care for children in poor families, and some adults.

As lawmakers in Richmond look to bridge a funding gap of $3 billion or more, reductions in Medicaid funding, like reductions in education funding, are among the difficult choices they face.

It does not appear, though, that they will tap an additional funding steam through the cigarette tax, local representatives say.

“Raising taxes … during a recession has been repeatedly demonstrated to be harmful to the overall economy,” said Del. Kathy Byron, R-Campbell.

She said that the $155 million Kaine proposed moving from Medicaid to the general fund could be moved back if the cigarette tax fails.

Del. Ben Cline, R-Rockbridge, said there are many concerns about a cigarette tax being a sus-tainable source of revenue. If the tax goes up, sales go down, meaning the tax might not raise $155 million.

“You can find funding for Medicaid from other parts of the budget as long as we make Medicaid a high enough priority, which I believe we should,” Cline said.

When asked what other budget areas could be used for Medicaid funding, he said he was focus-ing on education but the House Appropriations Committee would look for other areas.

Another way to pay for Medicaid arose last week: The federal economic stimulus bill passed by the House of Representatives on Wednesday included $82 billion in Medicaid funding, about $1.4 billion of which would come to Virginia over a 27-month period.

It is not clear whether states would have to match Medicaid funds from the stimulus bill. Del. Philip Hamilton (R-Newport News), who sits on the Appropriations Committee, said he heard the bill would not require a match, but it was not final.

Del. Lacey Putney (I-Bedford) pointed out that the stimulus would provide “far more money for Medicaid than the tobacco tax is projected to produce.”

Other lawmakers want to be careful about counting on the stimulus money.

“The stimulus package changes the landscape, but I believe we must still be cautious,” said Shannon Valentine, D-Lynchburg. It is unclear how much money the final bill would have and how it would be divided between the states.

Dawson shared Valentine’s view and added that the stimulus bill is a temporary solution.

“I think that the prudent course here is to really get a solid financial basis for funding Medicaid … and then use the stimulus package to offset increases in enrollment because of the economy,” Dawson said.

Finding some solid financial footing for Medicaid, however, could become harder this week. Lawmakers will receive a new round of revenue forecasts. Some expect the budget shortfall to increase from $3 billion to $4 billion.

“I am not sure what the numbers will be, but early indications are not good,” Valentine said.

She said she has received more than 1,000 e-mails asking the General Assembly to not cut Medicaid funding.

“I wish I could tell them how this is going to happen,” she said.