A recent article in the Denver Post stated that Colorado's Medicaid program could face potential reductions to its $16 billion in funding from the state and federal government. KVNF Senior Reporter Lisa spoke with Jonathan Cohee, CEO of Delta Health, about how cuts to Medicaid would impact the small rural hospital and its clinics on Colorado's Western Slope.
Lisa Young: Can you tell us how cuts to Medicaid would impact Delta Health, its rural independent hospital and clinics?
Jonathan Cohee: Great question. Medicaid and Medicare comprise about 75% of our payer mix. Medicaid in and of itself is about 14%. The Medicaid participants in the state of Colorado itself have really had a hard time over the last two years as Medicaid disenrollment after the COVID waivers disappeared.
We went through a Medicaid disenrollment period and what that did is it completely eliminated people's eligibility and you had to reapply for Medicaid. And there really wasn't a plan around that. That hurt because it took us about eighteen months, and personally here at the hospital, we sat up a program to try to make it easier for people just to re-enroll. And with that, you saw an increase in charity care and self-pay.
So (it was a) big burden to put on both the hospital and people individually if they didn't have or couldn't receive services because they no longer had it. A hospital like ours, our dependency, like I said 14% of our payer mix is Medicaid. With Medicaid and Medicare, we lose money on every patient that we see. It doesn't completely pay for the care for the cost. But it's something, it's some revenue to bring into the hospital. It 's imperative that people have that coverage that they need, because otherwise they don't get the care that they receive.
Young: As far as Delta Health patients, who would be affected most by cuts?
Cohee: I would say predominantly there's a big pediatric population that depends on Medicaid funding. And so I would say the largest impact to the population would be on the pediatrics.
So, so much of the programs that we are dependent on are really based on our Medicaid and Medicaid kind of drives other programs. But the population , as a whole as it relates to Delta County, the largest impact will be on the pediatric population.
Young: What are you hearing from other rural hospitals or long-term care facilities when it comes to the possible federal or state cuts to Medicaid?
Cohee: There's not really confusion. There's a lot of concern. Rural hospitals have a large portion and even some of the urban hospitals that take care of a predominance of Medicaid patients. There's a tremendous concern because if you take a razor thin margin ,that we typically always operate on, and you throw anything into that it can throw the whole system a from a zero margin to a negative margin in a big hurry.
The hospitals that we have here, the rural hospitals in the state of Colorado and all over the United States, we're not built year over year to sustain multiple years where we lose money. We have to bank on being able to break even at the end of the year. And any disruption in any of the payer mix in the rural hospitals are disproportionately hit because of our large dependence on Medicare and Medicaid patients.
So everybody's concerned. I think the contingencies right now that you build on, you're really having to make sure that you're going through each and every department in building those efficiencies where you can. But then also building those contingent plans on what if, what if this reimbursement goes. Unfortunately what you're looking at then is what are those services that we have to cut, we can no longer afford. Nobody wants to have those conversations, but it's really those contingencies in the back of our mind.
So I think that's where everybody is right now. I think that there's solutions that we have and everybody's being a strong advocate and making sure at the federal level our voice is being heard. Here in the state level, our voice is being heard. I've been fortunate enough to be able to do some testifying. I had an op-ed today that was published in the Grand Junction Sentinel to talk about some of the rate setting.
So we just have to do whatever we can to get our voices out there and be heard so that we're just from our representatives in the state, in the house, They're able to really take a good hard look at this and the impact and do whatever they can in their control to. Protect the safety net hospitals, protect the critical access hospitals, protect the hospitals like us in the rural areas that we can continue to provide these services.
Young: Colorado spends about one-third of its budget on Medicaid. State lawmakers are reluctant to cut the program. However, as the state faces a $1 billion deficit in its budget, there is talk that they may consider reducing rates and paying providers less. At the federal level, it's possible that the government could cut $880 billion from the program over the next ten years. My question is, can a small hospital like the one in Delta absorb any cuts to Medicaid rates or payments and still survive?
Cohee: The short answer is no. You, you really can't and I'll give you an example of that. This is Medicaid related, but it's not.
In 2023, at the end of 2023, so for the fiscal year 2024 we lost our 340-B the drug discount, so the federal program. We lost our eligibility and it was really all based on our Medicaid inpatient day numbers, right? So we had disenrollment which decreased the Medicaid population, those that were eligible for Medicaid until they re-enrolled. Because of that, it decreased our Medicaid inpatient days.
Secondary to that, we lost our 340-B eligibility. The impact to this hospital was about 3.5 million dollars. So 2024 we finished with a negative 2.5% margin. That's about two point negative or $2.4 million dollars. We were able to put some operational things in place where we worked on Medicaid enrollment. We worked on our patient days and how we looked at that each and every day. And for 2025, we're now able to have our Medicaid days to such that we made our 340-B eligibility.
So we're okay for 2025, but any effect on Medicaid has a trickle down effect, right? So it decreases your reimbursement and then other programs are predicated off of those numbers. So if we mess with the enrollment criteria at all, that's the price that you pay. It's the unintended consequence of trying to take the money out here to kind of put it here.
W are not built, there's not a rural hospital in the United States that's built to sustain a negative margin year over year and couldn't afford to do another year like that. This year we're starting off, we have a great start to January and February. (We have a) positive margin to start, which is exactly what we want to see in here, but we cannot sustain any, any change. There are avenues that, we can talk about that. I think we're going to hit that in your next question. But, the short answer is no. And you heard my longer answer.
Young: I think you did mention this before, but we'll cover it again. What steps is the hospital taking as possible cuts to Medicaid are looming on the horizon?
Cohee: Yeah, the biggest thing we're doing is going department to department and talking to the directors and trying to find the efficiencies. Where can we find and gain even more efficiencies? What are we missing? And so each and every one of our hospital departments are going through that. Those aren't massive cuts, but it's just really looking at all the service agreements that we have. Where can we build efficiencies? Where do we have manual processes that we can change? To help sure things up and be again more efficient. And where do we have those revenue enhancement opportunities? Are there things that we're doing that we're not capturing and getting credit for and being able to bill? So you really have to go over over those.
And I think the other thing is what I mentioned is the advocacy piece. You know, opportunities like this with KVNF, Lisa, and y'all allowing us to have that voice and put it out there. So that we can, we can say, hey, 'here's what we're trying to do at the local level. At the state level'.
I understand that we could face cuts. There's pieces in our Medicaid program that we could look at doing more efficiently. On the state level, we have a tremendous amount of admin fees, and there's a tremendous amount of the Medicaid dollars that are being spent in admin fees. Admin fees each and every year, if you look at over the last seven years have continued to increase. The amount of money that we put into the system, all of the hospitals in the state of Colorado has been consistent.
The amount of money that we get back from chase fees has been pretty consistent. So the amount of money we put in has been about the same incremental cost or incremental raise on the amount of money that we get back out. But there's been astronomical raises in the state of Colorado's admin fees that they take out of that Medicaid money. So I think if we look anywhere, I think that's where we should look right now in the admin fees, see what we can do to reduce (them).
Young: There are so many people who rely on Delta Health for their primary care. What can patients do who are also concerned? A lot of Medicaid and Medicare patients, obviously. But what would you ask them to do at this time that could help Delta Health and other rural hospitals?
Cohee: Use your voice. I mean, this is why and how we're set up. My morning started because the joint, the Joint Budget Committee is getting together and making some major decisions today. So my morning started rattling off about seven emails to our senators urging them to hear what I had to say (and) look at what I had to say. And make sure that they're looking at our chase fees. They're looking at the rack bill that's there. And they're helping keep us in mind when they're making decisions on that. And that's what we in the community can do.
Whoever your representative is, right, if you're reaching out to Representative Soper, if you're reaching out to Senator Mark Catlin, use your resources and use your voice. They want to hear from you and they need to hear from you. And the more of their constituents that they hear from, the more they're able to take that battle cry into that fight that they need. It's not that they don't want to push for us, but we have to have our voices louder than the voices that are on the front range.
Young: I don't have any other questions, but I will allow for any other comments or anything that I missed that you think is important.
Cohee: I think we captured all of it. I think that the Medicaid for us here in this community with the population that falls where they fall.... and they need those services, they need those services for a reason. And where they are at their time in their life (for) this system to be able to deliver them the care that they need, they need to be able to get it.
Our pediatric population needs to be able to get the care and services that they, that they need to get because if they can't, if their health won't allow them to pay attention and to be in school. They're going to fall behind and these first few years are, are, are precious. And that's really the programs right now that are starting to fall out are those zero to six year old.
And, you know, there's a book that was put out a really long time ago. 'All I really needed to learn, I learned in kindergarten' and the reason that is, is zero to six, you learn, you learn a lot. And if you miss out on that, you're behind for a really long time. And so that would be my biggest pitch that I would put out there. Amongst anything and everything else, it's the old therapist that's in me and having run those programs for pediatrics.
That's the real losers in all of this. It really is. Also, as a community, we're dependent on Medicaid dollars. You'll hear me say that we lose money on every Medicaid patient that comes in, but we are dependent on that from a financial standpoint to run the hospital to be able to deliver those services to everybody in the community. So, that's all I would add to it, but Lisa , I just really appreciate the ability to come on KVNF and tell our story.
Young: I know there's one area that we didn't cover and that really comes down to if you have to cut services or programs that could mean potentially cutting staff. So there's a lot of dominoes that could fall if these Medicaid cuts go through.
Cohee: Yeah, absolutely and that is obviously a last resort, but that is the effect of it. And we just know with the cuts, you mentioned the billion dollar budget. Our prison was just like on that, on that cusp and thanks to the good people and everybody I talked about using their voice and sending those emails and making those calls we're able to talk to those people in the Joint Budget Committee and that didn't happen. But any cuts to our community are devastating, whether that's our prison, our hospital.
Young: Yes, living in a rural area means that the margin for error is a lot less than it would be in larger communities. Special thanks to Jonathan Cohee, CEO of Delta Health, on this conversation about potential cuts to Medicaid.
