The effect of Indiana’s Medicaid work experiment on community health centers (updated estimates).

By Jessica Sharac, Peter Shin, and Sara Rosenbaum

In June 2019, we published an estimate of the impact of Medicaid work experiments in seven states, including Indiana.  This analysis updates our earlier version in order to adjust for modest changes in estimates regarding the impact of Indiana’s experiment on Medicaid enrollment.

Community health centers treat all patients equally. Therefore, at health centers experiencing a major revenue loss, the implications could be expected to reach all patients and services. In 2018, Indiana’s 25 community health centers served 500,822 patients; over half (54%) were insured by Medicaid. Medicaid is the single largest source of health center revenue nationwide, and Indiana is no exception. In 2018, Medicaid accounted for 49 percent of total revenue at Indiana’s health centers compared to federal Section 330 health center grants, which accounted for 19 percent of total revenue. 

Our earlier loss estimates were based on 2017 data from the Uniform Data System (UDS), a government reporting system to which all health centers report information on patients, services, staffing, revenue, and quality care indicators. This analysis updates our earlier impact estimate for Indiana 2018 UDS data, published; the earlier estimate was based on 2017 UDS data. 

The “Gateway to Work” Medicaid work experiment began on January 1, 2019 but did not require eligible adult Medicaid enrollees to report work activity until July 2019. The experiment applies to beneficiaries aged 19 to 59. 

Between July 2019 and September 2019, Indiana’s experiment required non-exempt participants to work 20 hours per month and report their activities. The work requirement rises to 40 hours per month during the October-December 2019 time period and 60 hours per month over the January-June 2020 time period; beginning July 2020, 80 hours of monthly qualifying activities are required. Qualifying work activity includes working, searching or training for work, taking classes, and volunteering.  Enforcement begins in December 2019.

Indiana’s experiment applies to both adults whose Medicaid eligibility is tied to traditional eligibility criteria (e.g., very poor parents of dependent children) and adults whose eligibility is tied to the Affordable Care Act’s Medicaid expansion and who, in Indiana, are covered as a result of a Medicaid 1115 demonstration.  (Indiana’s work experiment is an amendment to this original experiment, which includes eligibility restrictions not found in non-demonstration expansion states). The categories of people exempt under the work experiment phase of Indiana include caregivers of disabled dependents or dependent children under age seven,[1] people classified as medically frail because of serious and complex conditions, women during pregnancy and post-partum recovery, students, and people who are homeless, were incarcerated in the past six months, or who are in active SUD (substance use disorder) treatment. Non-exempt Medicaid beneficiaries are required to meet work and reporting requirements at least eight months out of the year; this 8-month period of performance is phased in during 2019, when the required performance period (work and reporting) runs for 2 months.

Compliance assessments begin in December 2019; non-exempt persons found non-compliant will face suspension of Medicaid benefits beginning the next calendar year, although coverage can be restored for those who report 80 hours of activity. This means that coverage losses can begin in January 2020.

In our June 2019 report, we applied Medicaid enrollment loss percentages calculated by Leighton Ku and Erin Brantley to estimate patient and staffing losses at community health centers located in Indiana as one of seven states with approved Medicaid work experiments. Using 2017 UDS data, we found that among Indiana health centers, overall patient care capacity would fall by between 12,621 and 21,036 patients. We also found that staffing capacity would decline by between 93 and 155 full-time equivalent (FTE) staff members.

Using the same methodology as in our earlier estimates, we now assess the impact of the work experiment on Indiana health centers using Indiana’s 2018 UDS data. 

Between 2017 and 2018, total patients served grew by over 21,000 patients (a four percent increase) and total staffing, by 69 FTE staff members (a two percent increase). The number of Medicaid-insured patients (including CHIP Medicaid) rose from 260,676 to 271,558 (a four percent increase) and the proportion of health center patients insured by Medicaid in 2018 remained at 54 percent. 

Table 1 shows the number of Indiana health center patients and FTE staff members in 2018 and projected one-year losses due to the work requirement program. With the rise of patient care capacity and staffing, potential lost patient care capacity also grows. Using the Brantley/Ku Medicaid enrollment loss estimates of 15 percent to 25 percent, we estimate that Indiana health centers could experience a loss of Medicaid by their patients of between 15,874 and 26,457 patients, resulting in declines of between six percent and ten percent of total Medicaid enrollment.  The commensurate loss of Medicaid revenue would total $11.7 to $19.5 million, an increase in revenue losses between 2017 and 2018 of $2.1 to $3.4 million, resulting in a loss of between three to five percent of total revenue. Applying this total revenue loss percentage to total patients and total staff, we find that Indiana’s community health centers would experience an overall reduced patient capacity of between 14,471 and 24,119 patients, and that FTE staffing would decline by between 104 and 173 staff members. These upward figures reflect the impact of the growing population of patients who now depend on the state’s health centers, whether or not insured through Medicaid.  

Conclusion 

With the growth of health centers comes growth in Medicaid patients served and revenue realized. This growth in turn means that a major shift in state Medicaid policy can be expected to have a spillover effect on patient care capacity and staffing among safety net health care providers such as community health centers, as these estimates show. In evaluating the impact of a large-scale Medicaid experiment that adversely affects access to coverage, therefore, including as part of the evaluation plan an assessment of community-wide impact becomes essential. The Indiana draft evaluation plan does not include this dimension, and in its assessment of the draft plan, CMS did not identify community-wide impact as a required element. Our findings underscore the importance of doing so.

Table 1. Projected Medicaid Revenue, Patient, and Staffing Losses in Indiana Community Health Centers

*The 2018 number of adult regular Medicaid patients, adjusted for the percentage of non-elderly adults who are outside the work requirement age range of 19-59; elderly Medicaid patients are assumed to be dual eligibles and would be categorized under Medicare

Source: GW analysis of Indiana’s 2018 UDS data, Medicaid loss percentages from Ku & Brantley, 2019

[1] Note that in July 2019, Indiana requested to expand the exempt categories of beneficiaries to include members of federal recognized tribes enrolled in managed care and to change the caregiver exemption for caregivers of dependent children under age 7 to caregivers of dependent children under age 13, but since this request is still pending and their website does not show the updated categories as exempt, we have used the same loss estimates as in our previous analysis.