Changes: Delaware hospitals brace for Medicaid cuts

Dover, Del. - Delaware may be one of the smallest states, but it’s also one of the fastest growing.

Only five states have seen more rapid population growth than Delaware since the beginning of the decade, according to Census data.

Delaware is dealing with more than an influx of new residents. Like other states, Delaware is also bracing for Medicaid cuts that will unfold in the coming years.

Brian Frazee, president and CEO of the Delaware Healthcare Association, talked with us about the pressures on Delaware hospitals in the latest episode of Changes, a video series from Chief Healthcare Executive.

“It is estimated that those policy changes will cost Delaware hospitals about $200 million per year,” Frazee says. “We could see tens of thousands of Delawareans lose their Medicaid coverage as a result of that legislation.”

In a conversation in the association’s offices in Dover, Delaware’s capital, Frazee talked about how hospitals were preparing to deal with cuts in Medicaid funding, more patients without coverage, and new work requirements for Delaware residents.

We also discussed efforts to curb healthcare costs in Delaware, the challenges of providing services for a rising population, caring for more seniors, and the impacts of state and federal legislation on Delaware’s hospitals.

Here are some excerpts from our discussion.

Q: Let's talk about the Medicaid cuts that a lot of hospitals nationwide are worried about, in terms of Americans losing coverage and also hospitals losing funding. How are Delaware hospitals preparing for the cuts in Medicaid and the prospect of more Americans losing coverage?

A: “We're very concerned about the cuts that are coming to Medicaid. Those don't go into effect until January 1st, 2027. So, we're actively preparing for that in collaboration with our state policymakers, of course.”

“But, you know, when people don't have healthcare coverage, they don't have Medicaid, they don't have health insurance, they tend to delay care or not seek care at all, and that ultimately leads them to the emergency room. That is the most expensive setting. It's not the most appropriate setting for managing conditions, and it's not good for the person either, and it's the most expensive setting. And so, it really takes us in the opposite direction of where we're trying to go in healthcare as it relates to more preventative medicine and population health approaches to care.

“And so, in Delaware, we estimate that this could cost hospitals up to $200 million per year. We could see tens of thousands of Delawareans lose coverage as a result of these cuts. But we are doing everything we can to help prevent that at the state level. We're working very collaboratively with our state Medicaid agency to educate Medicaid recipients, to also help do our part in making sure people are aware of the work requirements.”

Q: It's a tough spot for hospitals, also a tough spot for policymakers, too, in terms of finding additional money. Do you have any indication if policymakers in Delaware are going to be able to help offset some of these losses, and if they're going to be able to offer some more support to Medicaid and to make up for some of these cuts?

A: “That's certainly our hope. I know the state is committed to that. We are grateful to have a very strong relationship with our governor's administration and the Department of Health and Social Services. We've been meeting with them regularly on this very issue to get ahead of, you know, all the changes that are going to go into effect on January 1st. And so, I know they're doing their part. We're certainly doing ours to make sure that we're coordinating on those efforts to provide information and make sure that we're doing everything we can to be proactive in that space.”

Q: In terms of the work requirements, that seems to be a growing concern from the health system leaders I've been talking to, in terms of not just having some people lose eligibility, but even determining if some folks are actually too sick to work. In some cases, they're saying the actual regulations are even worse than they'd expected. Are you getting any feedback along those lines from the Delaware hospitals?

A: “We are, and we're getting it from the state as well. And so, you know, the federal rules are the federal rules, right? So we have to, of course, make sure that we're complying with federal law and regulations. But we're doing everything at the state level to provide as much flexibility as we can to make sure that we're being compliant with the new federal requirements.

“But also doing our part, again, to educate people and to make sure that they know about these work requirements and what they need to do to make sure that they stay on Medicaid, that they're meeting those work requirements. You know, the legislation did provide some flexibility there in terms of volunteering and some other creative ideas to meet those requirements, and so we want to make sure that people know about that, and also that they get ahead of it, so that when the redeterminations come up starting in 2027, we're ready to support them in the administrative process they'll have to go through to stay eligible for Medicaid.”

Q: It used to be once a year you proved that you could qualify for Medicaid. Now recipients are going to be asked to verify their eligibility twice. I'm hearing that's more and more of a big deal. Is that a concern you're hearing from hospitals, about people maybe falling through the cracks?

A: “Absolutely, yeah. That's one of the major concerns, because it will be a tremendous administrative burden on the Medicaid recipient and also the state, and for us, too, in the hospital world. And so, that is definitely going to put a strain. You know, when you look at states that have done this, like Georgia, for example, the administrative burden that came with Medicaid work requirements, that was a tremendous barrier to people staying on Medicaid even if they were otherwise eligible.”

Q: There’s something I've been hearing a lot, in terms of the challenges that are coming with the changes in Medicaid and the expectation that millions of Americans are going to lose coverage. It takes away the idea of trying to keep people out of the hospital and keeping them healthy, or at least helping them manage chronic conditions better so that they can avoid a hospital stay. Do you see this as sort of undercutting that goal?

A: “Absolutely, I couldn't have said it better myself, Ron. And I would say, for us here in Delaware, unfortunately, we have a higher incidence of chronic disease compared to most other states, especially as it relates to cancer, diabetes, obesity. And so for us, we feel that even more acutely.

“We're also the fifth oldest and sixth fastest growing state in the country. And so, we need more healthcare in our state, not less. And so, you know, it's important everywhere to have preventative medicine, but for us in particular, given our unique population dynamics, it's especially important.”

“Changes” is a series of conversations with top healthcare leaders. If you’re on the go or on the road, you can also get audio episodes wherever you get your podcasts.