Copyright © 2020 Albuquerque Journal
New Mexico hospitals that have struggled with hefty losses to prepare for a potential “tsunami” of COVID-19 patients are receiving an estimated $66 million financial lifeline from the Medicaid program.
The temporary increase in Medicaid rates to hospitals – up to 50% for eligible intensive care unit patients – could help stem a reported 40 to 60% drop in revenue that has led to layoffs, staff cuts and hundreds of medical workers being placed on leave. The combined hit in April alone was estimated at $250 million.
The state Human Services Department sought federal approval for the increased reimbursements even before the hospitals, particularly in rural areas, complained about losses due to state-imposed restrictions on elective surgeries and the cost of supplies to treat COVID-19 patients and keep medical staff safe.
“Even though it’s temporary, I don’t think there’s ever been a 50 percent rate increase for hospitals ever through the Medicaid program,” said Human Services Secretary David Scrase, a physician. “I did make this announcement to some of the hospital leaders that are on our (COVID-19 response) team … and I was asked to repeat the numbers several times because people couldn’t actually even believe it.”
Hospitals could receive additional help, depending on how long the crisis lasts. The new Medicaid reimbursement funding, of which the state pays a portion, will flow each quarter of the year as long as there is a designated federal emergency in place.
“Hospitals very much appreciate the latest increase of inpatient rates for ICU admissions and all other inpatients,” said Jeff Dye, president of the New Mexico Hospital Association. “Although temporary during the public health emergency, it will be a special boost for those hospitals that have a large volume of ICU cases. The general payment increases will also help those hospitals that have had low patient volumes across the board.”
Scrase said the reimbursements will be retroactive to April 1 and will be paid for Medicaid inpatients, even if they don’t have diagnosed COVID-19 infections. More important, he said, is the emphasis on the more critical coronavirus cases that require ICU care.
“After we did all our modeling, and realized that particularly the inpatient, but even more particularly the ICU beds, were going to be our biggest issue, we decided we wanted to provide a substantial rate of increase so hospitals can make the investments they needed,” Scrase told the Journal.
With the spike in coronavirus cases from northwestern New Mexico, about 150 patients have been transferred from that area to Albuquerque hospitals, he said. For several days last week, Scrase said, the ICUs in Albuquerque hospitals were over capacity.
“ICU is such a scarce resource in our state; we wanted to really put a premium on that,” he said, “to get people to want to expand and give them the resources for PPE and other equipment. And to get the resources for staffing. The ratios are much higher in ICUs right now, because some of these COVID patients are really sick.”
Hospital leaders in Albuquerque have devised plans to double the number of ICU beds if needed.
“If you do get COVID and you’re really sick, you want to have access to ICUs,” Scrase said. He said New Mexico’s ability to “do a 50% increase is kind of both to incentivize and reward people who have done so much to expand capacity.”
The state received approval for the higher reimbursements from the Centers for Medicare and Medicaid Services last week.
“The net impact will be hard to assess right now, as so many changes are happening at once in the health care system,”said Dye, whose association represents 46 New Mexico hospitals. “Still, this is likely the single largest rate increase hospitals have seen. Kudos to HSD for seeking approval early and making the increase effective back to April 1.”
In initially postponing nonemergency surgeries and procedures March 24, Gov. Michelle Lujan Grisham’s administration wanted to free up hospital bed space and ensure adequate personal protective equipment, ventilators and other equipment.
In early April, as hospitals prepared for the worst, Dr. Paul Roth, chancellor for the University of New Mexico Health Sciences Center, said, “We can see the tsunami that is fast approaching the state of New Mexico.”
But the ban on elective surgeries, steep prices for supplies and the loss of routine patients who feared getting treated for nonvirus illnesses, hit hospitals hard.
For example,the CEO at Holy Cross hospital in Taos reported in mid-March losing $400,000 in just a week.
On April 30, Lujan Grisham issued a new order loosening those restrictions to gradually resume nonessential procedures based on extensive guidelines from the state Department of Health.
Scrase said even the smaller hospitals will receive a 12.4% increase for any person in a regular hospital bed during the state of emergency.
About 40% of New Mexicans are enrolled in the Medicaid program,
The temporary reimbursement increase is in addition to the $175 billion in emergency funding for hospitals and other health care organization around the country under the Coronavirus Aid, Relief and Economic Security Act, the Paycheck Protection Program and Health Care Enhancement Act.
