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Three ways Medicaid expansion has affected revenue cycle performance

April 25, 2018

    Since 2014, 32 states and the District of Columbia have expanded their Medicaid programs under the Affordable Care Act (ACA), thereby reducing the number of uninsured and improving access to care. Several studies have reported the substantial positive impact of the Medicaid expansion on overall hospital margins, mainly through a reduction in uncompensated care and an increase in Medicaid revenue. But using results from our 2017 hospital revenue cycle benchmarking survey, we have been able to take a deep dive into the impact of expansion on revenue cycle performance.

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    Here are three of our top insights from comparing the performance of hospitals in expansion states with the performance of hospitals in non-expansion states.

    Low- and median-performing hospitals in expansion states have experienced noticeable cash acceleration

    While most providers in our 2017 survey reported fewer net days in accounts receivable (AR) than prior cohorts, the improvement was most marked among hospitals in states that expanded Medicaid. Best performers, however, achieved the same reductions in AR regardless of expansion status.

    Hospitals in non-expansion states report higher upfront collections.

    The median non-expansion state hospital in our survey reported point-of-service collections, as a percentage of net patient revenue, two times greater than its expansion counterpart.

    Charity care has declined for hospitals in states with expanded Medicaid coverage.

    On average, hospitals in states with Medicaid expansion reported 50% lower charity care, as a percentage of gross revenue, in 2017 than in 2013. In contrast, the equivalent organization in a state without coverage expansion saw charity care increase by 60% during the same time period.


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