Correlation Between Medicaid Expansion and Increased Medicaid Revenue

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Hospitals in states with Medicaid expansions had an increase of $3.2 million in mean annual Medicaid revenue per hospital.
Hospitals in states with Medicaid expansions had an increase of $3.2 million in mean annual Medicaid revenue per hospital.

HealthDay News — Hospitals in states that implemented Medicaid expansion in 2014 had a significant increase in Medicaid revenue, according to a study published in the Oct. 11 issue of the Journal of the American Medical Association.

In an effort to examine the correlation between Medicaid expansion in 2014 and hospital finances, Fredric Blavin, PhD, from the Urban Institute in Washington, D.C., conducted an observational study with analysis of data for nonfederal general medical or surgical hospitals in fiscal years 2011 to 2014. Data were included from a sample including 1,200 to 1,400 hospitals per fiscal year in 19 states with Medicaid expansion and for 2,200 to 2,400 hospitals per fiscal year in 25 states without Medicaid expansion.

Blavin found that Medicaid expansion correlated with a decrease of $2.8 million per hospital in mean annual uncompensated care costs (P < 0.001). Relative to hospitals in states without Medicaid expansion, hospitals in states with Medicaid expansions had an increase of $3.2 million in mean annual Medicaid revenue per hospital (P = 0.008). There was also a significant association for Medicaid expansion with improved excess margins (1.1%; 95% CI, 0.1 to 2.0; P = 0.04), but no improvement in operating margins (1.1%; 95% CI, −0.1 to 2.3 percentage points; P = 0.06).

"Further study is needed to assess longer-term implications of this policy change on hospitals' overall finances," Blavin writes.

Reference

Blavin F. Association between the 2014 Medicaid expansion and US hospital finances. JAMA. 2016;316:1475-1483.

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