Commercial Appeal - Tennessee hospitals may recoup $530 million for providing indigent care

Tennessee hospitals and community health centers could be getting more than a half-billion dollars from the federal government over the next decade to help them recover the cost of treating patients who cannot afford to pay.

A Medicare-reform bill that is awaiting approval by the U.S. Senate would send $53 million in Medicaid disproportionate share hospital payments to Tennessee hospitals each year for the next 10 years. Tennessee is the only state that doesn’t automatically receive the payments every year.

“It’s going to be a big help,” said Craig Becker, president and chief executive officer of the Tennessee Hospital Association. “We’ve got a lot of stressed hospitals, particularly among our small and rural communities. These payments can really make the difference between a black bottom line and red bottom line and, in some cases, keeping our doors open.”

Medicaid disproportionate share hospital, or DSH, funds are given to facilities that serve a large number of Medicaid and uninsured patients. Tennessee hospitals gave up their automatic annual allotment of the funds in 1994 when the state created TennCare, the state’s version of Medicaid, because they thought the loss would be offset by new patients who could afford to pay.

In recent years, Tennessee hospitals have been able to receive Medicaid DSH payments through a temporary provision that had to be renewed every one or two years. But those allotments were significantly smaller than what other states received under the standard funding formula.

A compromise negotiated by U.S. Rep. Steve Cohen, D-Memphis, and other members of Tennessee’s congressional delegation will send $53 million to the state every year over the next decade. The state would have to match the funds with $27 million annually.

The House overwhelmingly approved the measure March 26. The Senate is expected to pass the bill shortly after Congress returns from Easter recess on April 13.

“These funds will help keep hospitals open around the state and help provide Memphians and all Tennesseans access to the medical care they need,” Cohen said.

The combination of federal and state funding won’t come close to the $450 million Tennessee would have gotten annually if it had never left the Medicaid DSH program, Becker said. Still, “this at least gives some certainty to our hospitals, knowing they will be getting this,” he said.

In Memphis, the biggest beneficiaries of the new payment schedule would be Regional One Health and Methodist Le Bonheur Healthcare, both of which see a large number of Medicaid and uninsured patients.

Regional One, whose flagship hospital is Regional Medical Center, received $12 million in DSH payments last year for health care provided in 2013, said Tish Towns, senior vice president of external relations.

“This agreement will stabilize that amount, and then we don’t have to go back every year or every two years asking for partial DSH payment to be restored,” Towns said.

Methodist Le Bonheur hasn’t yet calculated how much it will receive in DSH payments under the proposal but had been getting $6 million to $10 million under temporary, year-to-year provisions, said Gary Shorb, chief executive officer.