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Greenville Business Magazine

Health Care Will See Some Changes as Public Health Emergency Ends in May

May 24, 2023 11:52AM ● By Liv Osby

The Covid pandemic brought a slate of federal emergency benefits to America’s health care system as it struggled to care for a tsunami of seriously ill patients amid a terrifying national crisis. 

But many of these benefits will sunset as the federal Public Health Emergency (PHE) comes to an end this month, and experts say that could result in some challenges. 

The Covid-19 PHE, declared in 2020 and set to expire on April 11, was extended to May 11 by the Biden Administration to give providers time to adjust and prevent “wide-ranging chaos and uncertainty throughout the health care system — for states, for hospitals and doctors’ offices, and, most importantly, for tens of millions of Americans.” 

The greatest impact is expected to be among people who lose their Medicaid coverage, estimated at around 6 million Americans, according to Dr. Georges Benjamin, executive director of the American Public Health Association. 

The PHE increased Medicaid enrollment substantially because enrollees didn’t have to qualify for eligibility every year during the pandemic, said Sara Collins, vice president for health care coverage and access at The Commonwealth Fund. That ended on April 1, she said.

Under normal circumstances, federal law requires states to review enrollees’ Medicaid eligibility every year, said Jeff Leieritz, spokesman for the South Carolina Department of Health and Human Services, which administers the Medicaid program in the state. 

But since March 2020, states could not disenroll anyone unless they moved out of state, asked to be removed, got other coverage, or died, he said. 

In South Carolina, that amounted to between 250,000 and 300,000 more enrollees, he said, setting the total at about 1.3 million people in 2022.

Nationwide, millions will likely come off Medicaid as states redetermine eligibility, Collins said.

“That could be quite destructive,” she added. “Some people won’t get the health care they need … and end up in ERs with more advanced conditions.”

While some former Medicaid enrollees will be eligible for Obamacare, gaps in coverage will inevitably emerge, creating barriers to treatment, testing, and vaccines, Benjamin said.

“The federal government is working to try to plug those holes,” he said, “but when you have a patchwork system like we have, someone always falls through the cracks.”

The eligibility review process will take a year and once completed, the state anticipates enrollment will return to pre-pandemic levels of between 1 million and 1.1 million, Leieritz said. 

“We are working very hard to ensure people who are still eligible remain enrolled,” he said. “This is getting back to the way Medicaid has been for a very long time.”

While Medicaid allows for retroactive eligibility for uninsured patients who qualify so hospitals can be reimbursed for their services, health systems would see a drop in reimbursements if those patients are no longer eligible and not enrolled in any other insurance, Collins said. 

“There will be waves of consequences, both for people enrolled in programs, and the institutions that serve them – hospitals, doctors, clinics,” she said.

In addition to people losing coverage, some hospitals may have to close or cut services if they don’t have the revenue to provide care, she said, adding it will be tougher for hospitals in states that haven’t expanded Medicaid. 

“Hospitals will do the best they can to stay afloat and cut back on areas that are money losers,” she said. “If you don’t have that reimbursement, you’re providing a lot of free care.” 

Benjamin agrees that losing enhanced PHE funding could be problematic for some hospitals. 

“They will see those revenue streams go away,” he said, “and there will be some rethinking of care and access to care as a result of that.”

The hit to hospitals will depend on how many of their patients lose Medicaid, how much those patients used that coverage, and what portion find alternative coverage, said Christian L. Soura, executive vice president of the South Carolina Hospital Association. 

“It’s not something individual hospitals have been able to model to a great deal,” he said.

In South Carolina, Prisma Health said its hospitals have experienced persistent challenges from the pandemic, including rising costs for labor and medical supplies and a shortage of nurses and other clinical staff. 

And the end of the PHE will mean additional burdens, with the largest impacts expected to be the loss of coverage for Medicaid patients, lower reimbursement for Covid patients, and lower payments for areas such as telehealth, which will reduce access to these services, Prisma said.

“With so many possible scenarios, it’s challenging to predict at this moment what the full impact of these changes will be on our organization,” Chief Clinical Officer Dr. Jonathan Gleason said in a statement. 

“For example,” he added, “it is difficult to predict whether a current Medicaid recipient who becomes ineligible as the emergency act sunsets will re-enroll in another health exchange program, or if they will decide to forego health insurance entirely, not seek preventative care, and ultimately end up receiving emergency care … with a serious medical condition later on.”

Prisma said that as the state’s largest safety net provider, it cares for all patients who need lifesaving care, insured or not, and that won’t change. 

“We experience a greater financial burden than others because of this,” Gleason said, “but we are committed to continue to enhance health care in our communities, especially in rural and underserved areas of our state.”

Prisma noted that in fiscal 2022, it provided more than $1 billion in charity care, unreimbursed medical costs and investment in community health.

“Fortunately, the number of Covid-19 patients we have been treating in our hospitals this winter continues to trend down,” Gleason said in March. “We currently have been hovering around 70 Covid inpatients in our hospitals in recent weeks. Last winter, this number hovered around 700 Covid inpatients. We continue to be optimistic.”

Lisa Goodlett, chief financial officer for MUSC Health, said that while MUSC’s finances recovered quickly from the pandemic, some community hospitals around the country were not as agile. 

The system’s main concern is the impact on people who lose Medicaid coverage, she said, noting enrollment increased by about 20 percent during the PHE. The loss of reimbursement is less of a challenge to MUSC than to small, rural hospitals, she said. 

“Once it settles back to lower levels … there will be no serious impact to finances that we can’t overcome,” she said. “But we do worry about access for Medicaid recipients.”

Another change that will impact hospitals’ bottom lines is the end of the supplemental payment for treating Medicare patients for Covid, Soura said. And with the average hospital profit margin at 2 percent, that means some systems are already under water, he said.

Eliminating that payment “isn’t going to help,” he said, noting that’s particularly true for rural hospitals which have lower patient volumes, fewer payers, and more uninsured patients to begin with. Those funds helped preserve access to treatment in rural communities, Soura said. 

“Now they’ll have two sets of problems,” he said. “Those funds are gone and … low volume and unfavorable payer mixes.”

Scenarios like that could result in service cuts, he said, noting that obstetrical services, for example, revolve around a whole team of providers that can cost millions of dollars to support.   

“It becomes impossible to make that math work in low-volume communities,” Soura said.

During the pandemic, he said, if hospitals had had to absorb all the costs of uninsured Covid patients, they wouldn’t have been able to survive financially.

And because they were focused on Covid care, they lost “a fair amount” of revenues they’d normally have earned through other services that “kind of paid the bills,” Soura said.

Goodlett said MUSC is also concerned that some insurers will end coverage for telehealth visits, whose reimbursement was similar to in-person visits. That will have long-term financial implications and will overly impact the ERs, she said.

“People are used to virtual care now,” she said. “We are advocating to make sure telehealth reimbursement stays the way it is. It’s better for health care.”

Most major telehealth coverage will remain for Medicare beneficiaries through 2024, according to the U.S. Department of Health and Human Services. 

What happens after that remains to be seen, Soura said, adding that telehealth coverage is important to hospitals and patients alike.

Leieritz said many telehealth services were covered by Medicaid before Covid and more were added during the pandemic. Nearly all of them will continue until at least May of 2024 as officials review their effectiveness, he said. Others will be made permanent, he added.

“We’ve seen a lot of value in it, in terms of new or more access to services,” he said. 

That will be particularly important for lower-income patients, Soura said.

“If you don’t have means to get to a provider and if you can’t have access for telehealth anymore, if you have to drive to the doctor’s office and don’t have a car … or can’t take off work, it can make the difference between getting care at all,” he said.

Private telehealth coverage hinges on the plan, Soura said. 

“For hospitals, it’s where do you treat your patients,” he said. “If the end of (PHE) flexibility means patients will have less access to telehealth, they will have to get treatment somewhere else – back in offices or hospitals, or not have care.”

It also could mean changes to the services providers are allowed to bill for, particularly behavioral health or substance abuse, because those providers who hadn’t historically done telehealth were permitted to use it during the pandemic, he said.  

How much will continue is still “somewhat up in the air,” he said.

Collins said most private insurers already covered telehealth pre-pandemic, but some changes made with the PHE will end, such as the waiver of a requirement for in-person visits for prescribing controlled substances. 

“(Telehealth) has become a big part of health care,” she said.

Benjamin said that telehealth has been a “real boon” for expanding access to care, though there are already pressures to rein it in because of fears of exploding costs. 

“But,” he said, “we ought to optimize it.” 

Another big impact will be on Covid testing, Collins said, noting that insurance companies will no longer be required to provide free at-home tests, likely resulting in cost-sharing. That will be the same with Medicare, she said.

Tom Crawford, assistant chief operating officer for MUSC Health, said the system administered more than 700,000 Covid tests at multiple locations around the state, and that as a safety net provider, it continues to offer testing and vaccination, including to the uninsured.   

Benjamin said the lack of coverage or copays for Covid tests when they’re no longer free will change some people’s behavior so they don’t test after a possible exposure, when they have mild symptoms, or before or after family visits or public events, he said.

It’s hard to predict if that will translate into an increase in cases, he said. 

Collins said vaccines and federally purchased Covid drugs will remain free regardless of insurance status so long as supplies last. But with the end of the PHE, testing and treatment “reverts coverage … back to our complex and confusing system of health insurance in the U.S.,” she said.

Other changes include the end of some reporting requirements and the return of historical reporting timelines for others, Soura said.

In addition, during the PHE, the medical licensure restriction on doctors providing services in other states was lifted, Goodlett said. That ends when the PHE ends, she said, but it was helpful to ensure access to care.

Leieritz said other coverage flexibilities that will sunset with the end of the PHE include pharmacies being able to extend a refill without a provider order.

The traditional federal/state spending split for Medicaid in South Carolina is about 70/30, he said, noting that the offset for continuous enrollment during the PHE increased the federal portion by 6.2 percent. 

That temporary increase will decline in 2023, he said, noting the federal/state split will also decline by about 1 percent to 69/31. This means about $68 million more in state funds will be needed to operate the Medicaid program, he said, adding the department has asked the legislature to cover that with state dollars.

DHHS also received some funding under the American Rescue Plan, he said.

So at the end of the day, Leieritz said the pandemic will be a wash financially for the state’s Medicaid program. 

“We’re not at the end yet … but as a state we believe we’ve put enough money in reserves to not have an impact on our budget,” he said. “It won’t be a loss for Medicaid program.”

Dr. Brannon Traxler, director of public health for the South Carolina Department of Health and Environmental Control, said the agency has been working with federal partners in anticipation of the end of the PHE.

And while she doesn’t expect to see any major impacts, the agency will experience some changes. Prior to May 11, for example, reporting of negative Covid tests was required and was likely to end, while positive results would still be required to be reported at a state level, she said.

Specifics for Covid hospitalization reporting were also expected to change, she said, with information still reported but in less detail.

Meanwhile, Covid vaccine data will still be collected, though in more aggregate form, but DHEC won’t be able to share as much of it because of state law, she said.

And although the commercialization of Covid vaccines is coming at some point, Traxler said DHEC will still provide them at health departments, including for the uninsured. And all children will be able to continue to get Covid vaccines under the federal Vaccines for Children Program, she said.

The only funding impacted will be a grant for nursing home infection control strike teams, scheduled to end in 2024, she said. But the state has prepared for that.

“It’s a beneficial program,” she said. “We will try to get creative … once funding goes away.” 

And while the pandemic introduced the state to using more non-traditional medical staff or staff in non-traditional roles, such as EMTs administering vaccinations, DHEC plans to continue that as well, she said.

“From a public health standpoint … we are not seeing hugely significant impacts for us,” she said. “Which is a good thing."