Arizona health care providers 'highly concerned' for proposed Medicaid cuts

A Republican budget plan that could cut up to $880 billion from Medicaid — the social health care safety net designed for the poor and disabled — has Valley hospitals concerned about what it could mean in the future.

Nearly 2.1 million Arizona residents are on Medicaid through the Arizona Health Care Cost Containment System, according to the Health System Alliance of Arizona, an association of local hospitals and health care organizations.

This equates to nearly 30% of Arizonans relying on AHCCCS, with many low-income children, mothers, seniors, people with disabilities or severe mental illnesses, and low-income working adults only having access to health care through the state Medicaid program.

Brittney Kaufmann, CEO of the Health System Alliance of Arizona, said in an emailed statement that the group’s members are “highly concerned” about the proposed federal cuts to Arizona’s Medicaid programs.

“Cuts to the Medicaid program will have far reaching impacts, including increased costs to the state and the private sector, reduced health care services and place tremendous strain on Arizona’s health care delivery system,” Kaufmann said.

Members of the alliance include providers Abrazo Health, Banner Health, HonorHealth and Dignity Health.

The Independent reached out to the above health care systems as well as Adelante Healthcare for comment. Abrazo Health and Adelante Healthcare did not respond by deadline, while Banner Health, HonorHealth and Dignity Health responded to contact the Alliance.

The alliance’s members make up approximately 80% of hospital-related care in Arizona, having a presence in more than 40 municipalities, 770 facilities and nearly 88,000 employees, including nurses, physicians, emergency care and more.

While the budget framework passed along party lines by the House earlier this week did not say those cuts to Medicaid would be made, the committee tasked with finding the $880 billion oversees Medicare and Medicaid, with Medicare being considered mandatory spending by the federal government few other options.

The American Hospital Association said such potential cuts could hamper care, according to a statement from the organization’s President and CEO Rick Pollack.

“On behalf of the hospitals, nurses, doctors and those who care for and serve the needs of 72 million patients that rely on Medicaid, we urge you to consider the implications of hinging the budget reconciliation bill’s fate on removing health care access for millions of our nation’s patients,” Pollack said in the statement.

In terms of financial impact in Arizona, the alliance reports that should the federal government shift the cost of Medicaid back to the state, Arizona will be required to cover the cost of all Arizonans with incomes up to 100% of the federal poverty level, due to Proposition 204, which was approved by voters in 2000 and increased Medicaid eligibility.

“Arizona will be required to cover the costs for this population in the amount of $1.5 (billion)-$2 billion,” according to the alliance.

Hospitals currently help to cover the bulk of the state’s share for coverage of the Proposition 204 population through the hospital assessment of about $700 million, which draws down over $5 billion in payments for all providers.

Abrazo, Adelante, Banner, HonorHealth and Dignity Health did not respond to how much each entity’s billing currently goes to Medicaid.

According to the alliance, Medicaid has long underpaid health care providers for the cost of care to treat patients, and alliance members’ payment-to-cost is approximately 80%, which is equivalent to a loss of 20 cents on the dollar.

Supplemental payments help the state mitigate the “chronic” underpayments created by low base rates for services and intend to ensure an adequate supply of providers who serve Medicaid recipients.

“Further restrictions on supplemental payments or implementing a per capita cap or block grant model would threaten access to care for entire communities across the country, not just Medicaid beneficiaries,” the Alliance stated.

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