Health care challenges ahead

 

Hudson Headwaters Health Network opened its newest family health center in May in Salem, N.Y. Now the center is among the many health care facilities across the region that are likely to lose revenue as the federal goverment cuts about $1 trillion in Medicaid spending in the years ahead. Joan K. Lentini photo

 

By MAURY THOMPSON
Contributing writer

SALEM, N.Y.

The grand opening of the new Salem Family Health complex in May marked a major milestone for health care in rural Washington County.

“It was a big day,” recalled town Supervisor Sue Clary, who had pushed for the center’s development for much of the past eight years.

The new health center, built and operated by the Hudson Headwaters Health Network, provides a lot more access to primary care for people in Salem and surrounding towns. The area has a graying population and is a 45-minute drive from each of the nearest hospitals and medical-office hubs – in Saratoga Springs, Glens Falls and Bennington, Vt.

In the weeks since the new center opened, Clary said she has been delighted to see people using it.

“I like to watch the parking lot, and I see that there are always cars there,” she said in a July 24 telephone interview.

But lately Clary also has begun to worry about how the health center will be affected in the years ahead by major cuts to Medicaid funding under the new domestic policy legislation President Trump signed into law on July Fourth.

The legislation cuts more than $1 trillion from health care nationwide over 10 years, said Dr. John Rugge, the founder and former longtime chief executive of Hudson Headwaters.

And some experts predict community health centers could be among the hardest hit by the cuts.
“It’s a little bit frightening,” Clary said. “In a small town, these things matter.”

Clary is hardly the only person who’s worried. Across the region, health centers, hospitals, nursing homes and local social service agencies are starting to consider how they’ll navigate the reduced revenues and new expenses imposed by the federal legislation. And many are still trying to gauge the magnitude of the changes ahead.

Pamela Fisher, the director of external affairs for Hudson Headwaters, declined an interview request for this story in late July, saying it was simply too early to understand the impact of the new law.

 

Big bill, many changes
Most of the new law’s spending cuts and policy changes will begin to take effect after next year’s congressional elections.

“If there’s a silver lining, it’s that these new policies won’t become effective until the out years of 2026, 2027 and 2028,” said Kevin Kerwin, president and chief executive officer of Iroquois Healthcare Association, a trade group of upstate New York hospitals.

Over 10 years, federal Medicaid payments will be reduced an estimated 19 percent, or $120 billion, to New York; 13 percent, or $2 billion, to Vermont; and 13 percent, or $25 billion, to Massachusetts, according to the Kaiser Family Foundation. (New York has a much higher reliance on Medicaid than some other states.)

Congress included the Medicaid cuts in comprehensive spending legislation that made permanent the temporary tax cuts passed in the first Trump administration in 2017, established new tax cuts and credits, and increased spending on defense and immigration enforcement. The legislation, dubbed the “big, beautiful bill” by Trump and his allies, passed the Senate and House in near-party-line votes, with Democrats unanimously opposed, at the beginning of July.
Kerwin said it’s too soon to estimate the facility-specific reductions in revenue that likely will result from the Medicaid cuts.

“There’s more that we don’t know than what we do know, at this point,” Kerwin said.
But state governments and health-care organizations already are bracing for major changes. Vermont allocated about $300 million in this year’s state budget to offset expected federal Medicaid cuts. New York legislators are expected to meet in a special session this fall to weigh how to respond to the cuts.

The new law outlines broad policy changes and total reductions in spending, but federal agencies now must determine details of how the changes will be implemented.

“I saw a recent analysis where there are 40 components, just for health care,” said Rugge, the founder and longtime leader of Hudson Headwaters, which operates health centers in six New York counties from Washington, Saratoga and Warren north to the Canadian border.

Now in retirement, Rugge is leader of the volunteer advocacy group Healthcare Coalition of New York, which was formed to oppose the federal cuts and now will focus on urging the state to continue to support rural health care.

One of the more widely discussed of the new law’s provisions is a new work requirement, beginning at the end of 2026, for many Medicaid recipients. With certain exceptions, adults under 65 with children over age 15, or with no children, will be required to work or volunteer at least 80 hours a month to remain eligible for benefits.

In addition, non-citizens who are in the country lawfully, such as asylum seekers, will no longer be eligible for coverage under state health insurance exchanges — the federally subsidized health plans for people who earn more than the Medicaid limit but do not have health insurance through an employer.

The new federal law also contains a multitude of other policy changes, new restrictions and new co-pays that are less widely known, Rugge said.

One major change is a prohibition on new use and much existing use of a so-called “provider tax,” a tactic through which states tax health care providers and then use the revenue to gain federal matching funds they can use to increase payments to providers.

“It’s akin to money laundering, but it’s part of the system,” said Andrew Cruickshank, the president and chief executive of Fort Hudson Health System in Fort Edward.

Twenty-two states, including Vermont and New York but not Massachusetts, now have a provider tax, according to the Kaiser Family Foundation.

 

Shrinking ‘expanded’ Medicaid
Medicaid was created in the 1960s as a joint federal- and state-funded health and long-term care insurance program for the poor, elderly and disabled. In New York, county governments also pay a portion of the program’s cost.

Although it began as a health-care program for people in poverty, Congress broadened Medicaid’s scope over the years — especially when it passed the Affordable Care Act, the health care reform championed by President Barack Obama, in 2010. That law expanded Medicaid coverage to adults with incomes up to 138 percent of the poverty level — and provided enhanced federal matching funds to states providing coverage to this population.

In New York, this type of coverage is called an “essential plan.” In Vermont, expanded Medicaid coverage is provided through Vermont Health Connect, and in Massachusetts it’s provided through the Massachusetts Health Connection.

These types of expanded Medicaid represented a seismic shift in federal healthcare policy when they were set up under the Affordable Care Act, which also became known as Obamacare. The goal of that effort was to get as close as possible to having universal health insurance coverage, in various public and private forms, thereby improving patients’ access to care while reducing the volume of uncompensated care being provided by hospitals, physicians and health centers.
Now, some health care providers fear they’ll face an increase in uncompensated care for treating patients who may lose Medicaid coverage under the new law.

“These folks are going to continue to have needs,” said Paul Scimeca, the president of chief executive of Glens Falls Hospital.

Health care officials said they are morally, and in some cases legally, required to provide care regardless of whether patients are insured or not.

“If you practice in a small town, there’s no way you can tell people that you see at the grocery store and at the theater, ‘I can’t treat you anymore,’” Rugge said.

Health care experts say patients who lack insurance tend to avoid getting primary and preventative care and delay getting care when they develop symptoms of serious illness. The result is that they often wind up needing more extensive and expensive care later.

New York Gov. Kathy Hochul has said that as a result of the federal Medicaid cuts, uncompensated care is expected to increase by an estimated $3 billion annually statewide.
And even as uncompensated care is increasing, it’s possible that provisions of the new federal law will limit or reduce the payments the state makes to hospitals to offset uncompensated care, Kerwin said.

Supporters say changes under the new law will add accountability while bringing the Medicaid program back in line with its original role as a health insurance program for the truly impoverished.

“We want to strengthen and protect Medicaid,” U.S. Rep. Elise Stefanik, R-Schuylerville, said in a July 12 interview on Buffalo radio station WUSV-1270 AM. “That’s what this bill does.”
But Rugge said he hopes no one wants to return Medicaid to the scale it had at its inception in 1965.

“It was for people under the poverty level, and it was just to see the doctor,” he said.
The Medicaid program has been expanded seven times since then, most recently under Obamacare, Rugge said, adding that he is disappointed to see the federal government now cutting back.

 

Coverage at stake for millions
The Congressional Budget Office has estimated about 11 million Medicaid recipients nationwide will lose coverage under the new law.

The law’s supporters have played down the potential loss of coverage.
“If you’re one of these 11 million, you have 18 months to determine, ‘Hey, can I get some type of part-time work? … It’s not a huge requirement,” said Rep. Blake Moore, R-Utah, the House Republican Caucus vice chairman, in a June 26 appearance on the C-SPAN program “Washington Journal.”

Critics of the legislation have said many recipients will lose their coverage either because they won’t be able to meet the new work requirements or because the new twice-yearly certification process will prove too complex.

Rugge predicted the new work requirements will apply to about 8 percent of Medicaid recipients, about half of whom will wind up not complying.

Community health centers may be hit the hardest.
Joe Dunn, the chief policy officer of the National Association of Community Health Centers, said in a July 12 interview on C-SPAN’s “Washington Journal” that typically half the patients at community health centers nationally are enrolled in Medicaid, which provides 40 percent of the centers’ revenue.

In Vermont, Northern Tier Center for Health in St. Albans has estimated it will lose 65 percent of its Medicaid revenue. Kathy Benoit, the health center’s chief executive officer, recently told The St. Albans Messenger that about one-third of the health center’s patients are covered by Medicaid.

Hospitals, in contrast, tend to draw a larger portion of their revenue from Medicare, the federal health care program for the elderly and disabled, which wasn’t cut by the new legislation.
Scimeca said Glens Falls Hospital receives about 6 percent to 7 percent of its revenue from Medicaid.
But any loss of revenue is critical when hospitals already are operating at razor-thin margins or at a loss, said Kerwin, of the Iroquois Healthcare Association.

“Unfortunately, 75 New York hospitals are already financially distressed, with many more on the brink,” the Healthcare Association of New York State and Greater New York Hospital Association said in a joint statement that Hochul’s office distributed with a news release on July 1.

At Glens Falls Hospital, “we are on the positive side, knock on wood, just slightly,” Scimeca said.
Scimeca said the hospital will seek to absorb the pending cuts with increased efficiency and collaboration through its affiliation with Albany Medical Center. The hospital is committed to maintaining its current services, he added.

Other area hospitals said it is premature to comment on the potential impact of the legislation.

 

‘Rural health fund’ planned
At Berkshire Medical Center in Pittsfield, Mass., spokesman Michael Leary stressed the hospital’s commitment to maintaining services.

“We are working in partnership with the Massachusetts Health & Hospital Association on reviewing the potential impacts of the bill, which will affect all hospitals in Massachusetts and across the nation,” Leary said in written statement. “Some of these impacts are not scheduled to occur for an extended period of time. We continue to provide our programs and services to all who live and work in the Berkshire community.”

Rutland Regional Medical Center is not commenting about the legislation at this point, spokeswoman Gerianne Smart said.

U.S. Sen. Ed Markey, D-Mass., released a list of 300 rural hospitals nationwide that are at risk of reducing services, closing or being converted to other uses as a result of the legislation, including 11 in New York and one in Massachusetts, but none in Vermont. None of the hospitals on Markey’s list are in the Observer readership area.

In an effort to assuage concerns about rural hospital closings, the U.S. Senate made a last-minute addition to the new spending bill, providing $50 billion for a “rural health fund.”
Scimeca said he does not expect Glens Falls Hospital will benefit from this fund.

Rugge said it is not yet clear whether community health centers will be eligible for this funding. Although he said he appreciates that Congress recognized the importance of rural health care, Rugge said the fund will not be sufficient to offset an estimated $1.02 trillion in cuts to health care nationwide.

The $1.02 trillion figure includes cuts to the Supplemental Nutrition Assistance Program, formerly known as food stamps.

“Food is pretty essential, and it’s important to health,” Rugge said.

 

Nursing homes: More unpaid stays
Cruickshank, the Fort Hudson Health Systems president, said nursing homes are directly affected by two measures in the new legislation.

One is that the period for which a nursing home can bill Medicaid retroactively after a patient applies for coverage is being cut back from three months to one month.
Where this typically comes into play, Cruickshank explained, is when a patient is admitted to a nursing home temporarily under Medicare, which pays only for short stays for rehabilitation. The initial expectation is that the patient will return home, but if that turns out not to be feasible, it can take the family time to apply for Medicaid to pay for long-term care, resulting in a gap in coverage.

Nursing homes can’t in good conscience forcibly discharge those patients while they wait for Medicaid coverage.

“What it’s going to mean is there are going to be some unpaid stays,” Cruickshank said.
The other change for nursing homes is that the new federal law removes authorization for a new state tax on managed care insurance plans to fund Medicaid inflation adjustments this fiscal year and next. It’s not yet clear when that will be implemented.

“We’re not sure it’s going to affect us this year,” Cruickshank said.
The bigger question is what priority the state will place on nursing homes as it responds to a “sizable gap” in federal Medicaid funding, Cruickshank continued.

He hopes any cuts will be applied proportionately to all types of health care.
“If they are going to continue to fund these programs, all providers are going to have to take a haircut,” he said.

County governments in New York face potential increased costs for administration of Medicaid.
The legislation requires local social services departments to certify continued eligibility of Medicaid recipients every six months instead of once a year, and there will be additional administrative tasks associated with enforcing new work requirements.

The New York State Association of Counties estimates the legislation will increase county administration costs by 20 percent.