With a major piece of the Affordable Care Act set to go into effect in less than two weeks, Lawrence Memorial Hospital is bracing for cuts in revenue resulting from the 2010 law and the state of Kansas' subsequent decision to not participate in its Medicaid expansion.
During negotiations over the legislation, hospital associations agreed to reduce Medicare payments to help fund the increase in insured Americans, with the planned Medicaid expansion expected to make up for some of that lost revenue. However, after the U.S. Supreme Court ruled last year that states could opt out of loosening their Medicaid eligibility requirements, several, including Kansas, did.
So under the Affordable Care Act, Lawrence Memorial Hospital will not get its annual Medicare reimbursement increase in 2014, projected at about $2.7 million, CEO Gene Meyer said at today's LMH Board of Trustees meeting. Meanwhile, if Kansas had expanded its Medicaid program, the hospital would have received an additional $1.1 million in revenue.
"The numbers are going to be real next year," Meyer said. "The rate of increase we're not going to get is significant."
Another worry for LMH is that the cheapest plan being sold on the online health insurance exchange in Kansas, the bronze plan — there are also silver, gold and platinum versions — pays only 60 percent of costs, with the remaining 40 percent left to the patient.
"We've got folks who are going to choose this plan because of the low premium. Their ability to make up that 40 percent difference may be suspect," Meyer said. "We're very concerned about that from a … financial standpoint about what that will do to our (accounts receivable) and bad debt activities."
Still, he said, many people remain uninformed about the insurance exchanges, which begin open enrollment Oct. 1, and said the penalty for not having health insurance next year ($95 per person) will not be enough to deter people from going without it.
"The closer we get to this the more I believe ... that I don't think we're going to see much of an impact in 2014," Meyer said. "But it's here and I think we can choose to look at this as an opportunity to move forward … so here we go."
With that said, Chief Financial Officer Joe Pedley reported that he and his staff continue to work diligently on next year's LMH budget, which he expects will include a significant decrease in capital projects. "I don't think it's going to be any surprise that this year's going to be a really challenging budgeting year," he said.
In other business at today's Board of Trustees meeting:
—Kathy Clausing-Willis, vice president/chief development officer for LMH, announced that the recent Perry Jones Open golf tournament in Lawrence had 350 golfers and raised $115,000 for the LMH Endowment Association, an increase over last year. The annual event has brought in a total of $1.3 million for LMH. "It really is a way we come together as a community, even if you don't play golf, to support the hospital," Clausing-Willis said.
—Sheryle D'Amico, vice president of the hospital's physicians division, said LMH continues to actively recruit endocrinologists and rheumatologists in Lawrence, two medical specialties the community needs. She added that LMH recently signed on a new oncologist and a new neurologist is joining an existing practice in town.