Declining uninsured population leads to decreases in hospitals’ charity expenditures

CHICAGO (Nov. 17, 2015) – Since the inception of the Patient Protection and Affordable Care Act (ACA), hospitals across the country have experienced a decline in uncompensated care rates due to the declining uninsured population, particularly in states that have expanded Medicaid. Medicaid expansion states have seen their uninsured self-pay payer mix decline 31.2 percent since the start of 2014, while charity expenditures have declined 36.6 percent over the same period, according to new data released by Crowe Horwath LLP, one of the largest public accounting, consulting and technology firms in the U.S. 

Crowe^® Revenue Cycle Analytics (Crowe RCA) software generates finance and revenue-cycle benchmarking results for several key performance indicators. The quarterly Crowe RCA Benchmarking Analysis, “Decreasing Charity Expenditures – Putting Medicaid Expansion State Hospitals at Risk?” examined patient account transactional data from 491 hospitals through September 30, 2015.

“While the ACA created some significant positive impacts for many hospitals, it’s also created several challenges. There are a number of items – ranging from certain Medicare reimbursements to a hospital’s tax-exempt status with the Internal Revenue Service – that are directly impacted by how much charity care that hospital provides. With more people insured today, less charity care is needed,” said Cory Herendeen, a principal in Crowe Performance Consulting. The updated analysis details the impact and outlines steps hospitals can take to document charity care.  

Additionally, the analysis provides up-to-date statistical information on payer mix, volume and net revenue per case. Examples include:

• From September 2014 to September 2015, inpatient admissions increased 3.6 percent for nonexpansion states while decreasing 1.4 percent for expansion states;
• Outpatient visits from September 2014 to September 2015 dropped for both expansion and nonexpansion states, declining by 2.8 percent and 4.3 percent respectively;
• The difference between Medicaid expansion states and nonexpansion states was driven largely by high volume and low net revenue laboratory services delivered at a handful of hospitals in expansion states;
• Compared with September 2014, average inpatient net revenue per case in Medicaid expansion states increased 2.7 percent while nonexpansion states remained flat; and
• Average outpatient net revenue per case increased in Medicaid nonexpansion states by 4.1 percent from September 2014 to September 2015 while expansion states increased slightly, up 1.1 percent over the same period.

For more information or to download a copy of the Crowe RCA Benchmarking Analysis, please visit www.crowehorwath.com/benchmarking-release.

About the Crowe RCA Benchmarking Analysis
The Crowe RCA Benchmarking Analysis includes 491 distinct hospitals classified as acute, critical-access, rehabilitation, psychiatric or cardiovascular care facilities. The database contains information from hospitals in 37 states, with 20 or more facilities represented in Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Ohio, South Dakota, Texas and Wisconsin.

About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting, consulting and technology firms in the United States. Under its core purpose of “Building Value with Values^®,” Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk and performance services. With offices coast to coast and 3,000 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest global accounting networks in the world. The network consists of more than 200 independent accounting and advisory services firms in more than 120 countries around the world.

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