South Dakota Task Force: Medicaid Expansion Could Save Hospitals $30M

South Dakota hospitals could save $30 million annually if the state expands its Medicaid program because there would be a drop in uncompensated care, according to a report from a task force created by Gov. Dennis Daugaard.

Extending Medicaid coverage to adults earning up to 138 percent of the federal poverty level under the Patient Protection and Affordable Care Act would also decrease uncompensated care costs for federally qualified health centers and increase revenues at community mental health centers, according to the report.

In line with recommendations from Gov. Daugaard, the state legislature chose not to expand Medicaid during its 2013 session. Instead, Gov. Daugaard formed the task force to evaluate the pros and cons of expansion, according to the report.

The task force found expanding Medicaid would increase enrollment in the state by 54,000. The state would save $859,000 in general funds annually because the expanded program would cover inpatient medical care for indigent inmates. Additionally, county poor relief efforts could save $3.3 million because of the decrease in uncompensated care, although there wouldn't be direct savings to the Medicaid program in the absence of an agreement to shift those savings to the state.

Overall, the expansion would cost an estimated $59.8 million in state fiscal year 2014, with the cost reaching $409.8 million in 2020. Although the state would spend $102 million on the effort through 2020, it would also receive $2 billion in federal funds to pay for the expansion during the same time period. Overall, the federal government would cover 95.3 percent of the total cost through 2020, according to the report.

The federal government will reimburse states 100 percent of the cost of expanding Medicaid under the healthcare reform law for three years beginning in 2014. The reimbursement rate will decrease to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and beyond.

More Articles on Medicaid Expansion:
Michigan Medicaid Expansion to Allow Reimbursement for Telemedicine
Republican Legislators Sue Arizona Governor Over Medicaid Expansion
Michigan Lawmaker: Medicaid Expansion Delay Will Cost State Millions 

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