Texas hospitals will see the cost of uncompensated care reach $8.2 billion in fiscal year 2017 if supplemental payments, which are currently distributed through the Medicaid 1115 Transformation Waiver, cease after the waiver expires at the end of 2017, according to an independent study conducted by Health Management Associates on behalf of the Texas Health and Human Services Commission.
The waiver, which reimburses hospitals for the cost of care for Medicaid beneficiaries and the uninsured, negotiated by the state in 2011, supplies crucial cash for financially-strapped safety-net hospitals. To participate in the waiver, eligible Texas hospitals must put up their own local property tax dollars in lieu of state Medicaid matching dollars. Originally, the waiver was set to expire this month. After federal officials denied the state's request for a five-year extension and more money earlier this year, in May CMS agreed to extend Texas' waiver through the end of 2017, along with $2.2 billion in matching funds offered by the hospital districts, according to The Dallas Morning News.
According to the HMA study, Texas has the highest uninsured rate in the nation, with approximately 19 percent of the population lacking coverage. Implementing a health insurance program for low-income Texans, such as through Medicaid expansion, would reduce the uninsured rate and lower unreimbursed hospital costs by approximately $358 million.
The amount of uncompensated hospital care is expected to grow, based on demographics, underlying market factors and projected cuts to the Disproportionate Share Hospital payment program under the Affordable Care Act, according to the study.