Medicaid reforms could level the playing field between rural, urban hospitals, helping Southeast Missouri

By Holly Rehder on February 18, 2021

Last week, I elaborated upon the current Missouri Medicaid crisis. Because of the passage of Medicaid expansion into the Missouri Constitution, it is projected that our state will have to spend $200 million more annually. Yes, $200 million! Certainly, it means with a budget hit like this, vital social programs are expected to lose some funding. Things like K-12 education, roads and infrastructure, and public safety could all see their funding decline. 

It is because of these expenses that I opposed Medicaid expansion. It is already proving to be a strain on our state budget, and it only means more government and more bureaucracy. However, now that it has been passed into law, it is the duty of the General Assembly to get the most effective program that we can.  

I have already talked about one way the state could reform Medicaid in order to make it more efficient; by adopting a Medicaid-based fee schedule for reimbursing outpatient services, our state could save a lot of money. This is just one solution identified by the report commissioned by the Missouri Department of Social Services on how to make Medicaid more efficient. The report also indicated that if reforms were implemented immediately, Missouri could realize up to $1 billion in cost savings by 2023. That’s huge.

Another reform worth considering is capping reimbursements to hospitals for the procedures they provide. Currently, Missouri Managed Care Organizations — private companies that are contracted with the state to provide Medicaid services — reimburse hospitals at different rates. For instance, a hospital in St. Louis may be reimbursed at 200 percent the cost for a procedure that is reimbursed at 110 percent of the cost at a hospital in Sikeston. The theory behind this practice is that it encourages hospitals to see these patients and perform the procedure quickly. It is meant to incentivize access to care and speed of service. 

In practice, this creates a huge disparity between urban and rural hospitals. As the report also indicated, hospitals in rural areas are struggling to survive; the cost of providing care is rising, and a less dense population means a smaller customer base. We have great hospitals here in Southeast Missouri that need more support. More equitable treatment of urban and rural hospitals could truly help bridge the gap between our urban and rural areas.

That is why the state should cap the Managed Care negotiated reimbursements with hospitals at 110 percent. This will not only save money — allowing a bigger pot of funds for all patients — but it could be especially valuable given the huge disparities in the cost of treatment for some procedures. Thanks to the Trump administration’s rule requiring hospitals to disclose the prices they charge for treatments, we are just beginning to understand how out-of-control hospital costs can be. For instance, a recent Wall Street Journal article identified that a C-Section at one hospital can cost anywhere from $6,000 to $60,000, based on the insurance plan. This stunning fact is emblematic of the lack of transparency that exists in the health care system, and one of the many reasons the price of health care coverage is through the roof.

When trying to identify cost savings, all options are on the table. Capping the Managed Care reimbursement rate to hospitals is just one reform that could save millions of dollars in taxpayer funds. This would help keep Medicaid viable for years to come while saving us from cuts to our other vital programs. The General Assembly should consider this, and other suggested reforms from the commissioned report, as we budget for the increases that Medicaid Expansion will bring.

Paid for by Friends of Holly Rehder, Henry ‘Butch’ Holyfield, Treasurer.

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