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Hospitals Hope To Extend Medicaid Reimbursement Program

By Gretchen Frazee

Posted November 27, 2012

A new state-run program that reimburses hospitals for treating high numbers of Medicaid patients is about to expire. The changes have significantly increased the amount the state has reimbursed hospitals over the past year.

The state law requires all hospitals to pay an annual fee based on the number of patient days spent at the facility. That money is then combined with state and federal dollars and redistributed to the hospitals that treat a disproportionate number of Medicaid patients.

Indiana Hospital Association's Vice President of Government Relations Brian Tabor says before the program was in place, hospitals were getting between 40 cents to 45 cents for every dollar of care given to Medicaid patients. Now, he says, it's closer to 80 cents or 85 cents.

"The funds now, perhaps even more so than before, are following those Medicaid patients to the hospitals where they're being served," he says. "So I think it has definitely created a more sustainable program here in the state of Indiana."

Indiana University Health saw a net gain of $267 million since the program was implemented. But in a statement IU Health points out it still provides hundreds of millions of dollars in uncompensated care each year.

"Government programs like Medicaid and Medicare still pay significantly below the cost of providing services, so the fee program reduces, but does not eliminate, the losses incurred for providing these services," the statement from IU Health says.

The program is set to expire June 30, 2013. The state legislature could vote to extend the program during the next session.

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