SC to cut payments to urban hospitals, send more to rural facilities

S.C. plans to fully reimburse rural facilities for uncompensated care by decreasing the amount given to urban hospitals

01/18/2013 12:00 AM

01/17/2013 7:51 PM

Beginning in October, South Carolina will take money from rich hospitals and give it to poor hospitals.

“We’ve long known that rural hospitals face challenges that larger hospitals don’t, and now, for the first time ever, the state of South Carolina is going to treat them that way,” Gov. Nikki Haley said during her State of the State address Wednesday. “... (S)tarting next year, we plan to fully reimburse rural hospitals for their uncompensated care.”

Last year, South Carolina’s hospitals provided more than $840 million in health care for people who could not pay for it. Medicaid – the joint federal-state health-insurance program for the poor – paid for $461 million of those costs, or about 57 percent.

South Carolina now pays all hospitals evenly for care that they give the poor. But Tony Keck, director of the state Medicaid program, says that is not fair. So starting in October, South Carolina will cover 100 percent of the cost of the free medical care given by 19 rural hospitals.

Keck estimates that will cost about $20 million – not new spending, just shifting money to rural hospitals from urban hospitals.

“The smaller hospitals have suffered at the hands of the bigger hospitals for years, and we have to start to reverse that,” he said.

But those payments, part of the state’s Medicaid Disproportionate Share Hospital program, are part of a larger dispute about the Affordable Care Act, commonly referred to as Obamacare. That act will add hundreds of thousands of people to Medicaid. In exchange, the government will start paying hospitals less for the free health care that they give because, theoretically, the hospital will not provide as much free medical care because more people will have insurance.

But the U.S. Supreme Court ruled states could opt out of the Medicaid expansion and, so far, S.C. leaders say that is what they will do. That has S.C. hospitals concerned they will be left out – getting less money for free health care and fewer patients people with health insurance.

“If we don’t expand Medicaid, we’re not realizing the full benefit of the Affordable Care Act and what we agreed to,” said Rozalynn Goodwin, director of policy research for the S.C. Hospital Association, adding that the uninsured will “continue to come to our hospitals and emergency rooms.”

But Keck said the federal payments to hospitals will not decrease until 2017. Even then, many more South Carolinians will be able to buy subsidized health insurance from federal health exchanges.

“They made a backroom deal with the president,” Keck said. “And now the hospitals who got snookered ... are coming to the Legislature and saying, ‘Well you’ve got to salvage our bad deal.’ ”

House Republicans have said they will not expand Medicaid in South Carolina, a stance Haley echoed in her speech Wednesday.

But Senate Finance chairman Hugh Leatherman, R-Florence, said he has not decided whether the state should expand its Medicaid program. “I’m ... trying to figure out what’s best for the state.”

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