August 30, 2013

Safety Net Providers and Uncompensated Hospital Care in Michigan

Cover Michigan 2013

Introduction

Michigan’s safety net providers were deeply influenced by the economic recession from December 2007 to June 2009,1 as the numbers of uninsured and publicly insured individuals grew statewide. The uninsured rate in the state peaked at 12.7 percent in 2009, and the Medicaid coverage rate increased steadily during and after the recession, to a high of 17.5 percent in 2011.2 As a result of the increase in both the uninsured and the Medicaid populations, free clinics and federally qualified health centers (FQHCs) saw increased demand for low- or no-cost services. In 2011, two years after the official end of the recession, 133,000 more people in Michigan were uninsured and 502,000 more were covered by Medicaid than in 2007. As a result of the growth in the uninsured population, many hospitals also experienced a sharp increase in uncompensated care costs.

This brief describes the impact of the recession on safety net providers, changes in uncompensated hospital care by county, service demands and use of FQHC services, and the change in the supply of free clinics in Michigan from 2007 to 2011. Key findings include:

  • Uncompensated care costs for Michigan hospitals increased by 42 percent from 2007 to 2011.
  • FQHC patient volume increased by 22 percent statewide from 2007 to 2011.
  • The proportion of Medicaid patients seeking care at FQHCs increased over 6 percent, while the proportion of privately insured patients declined by 4 percent from 2007 to 2011.
  • The volume of FQHC visits increased for all services from 2007 to 2011. Mental health visits had the largest increase in volume at 128 percent during this period.
  • From 2009 to 2011, the total number of free clinics in the state remained the same, but the location of many clinics changed. Five of the seven clinics in the Upper Peninsula closed during this time, leaving few options for residents seeking free care.

1 Business Cycle Dating Committee, National Bureau of Economic Research. September 20, 2010. U.S. Business Cycle Expansions and Contractions. http://www.nber.org/cycles/sept2010.html (accessed 5/1/13).

2 Data are from the State Health Access Data Assistance Center (SHADAC)-Enhanced Current Population Survey (CPS) data set, 2009. Most CHRT briefs use SHADAC’s American Community Survey (ACS) data set, which contains slightly different numbers related to the uninsured rate and Medicaid enrollment. This brief uses CPS in order to illustrate 2007 data prior to the recession, because ACS data are not available before 2008. (accessed 5/4/2013). The data are available at: http://www.shadac.org/datacenter/tables/tables/id/fde16eae-a781-494a-996f-c21989cddedc

Hospital Uncompensated Care

Hospitals play a critical role in the health care safety net by providing essential services to patients regardless of ability to pay. Charges related to uncompensated care costs for Michigan hospitals increased from $1.67 billion in 2007 to $2.37 billion in 2011. Overall, statewide uncompensated care spending increased by 42 percent from 2007 to 2011. Figure 1

Figure 1
Growth in Charges, Hospital Uncompensated Care, MI, 2007–2011

County(s) or Region 2007 $ Total 2009 $ Total 2011 $ Total 2007–2011 % Change
Calhoun-Jackson $78,034,995 $86,782,894 $84,751,474 8.6%
Genesee-Lapeer $90,725,333 $130,653,848 $139,942,849 54.2%
Gratiot-Isabella-Midland $21,364,009 $25,332,149 $32,127,870 50.4%
Hillsdale-Branch-St. Joseph $17,316,675 $21,393,232 $19,469,400 12.4%
Ingham-Livingston-Shiawassee $112,610,547 $142,156,708 $162,114,884 44.0%
Kalamazoo-Barry $68,474,600 $102,979,135 $92,786,888 35.5%
Kent $82,003,982 $115,769,285 $138,870,063 69.3%
Macomb $52,135,727 $107,764,754 $145,434,564 179.0%
Mason-Newaygo-Mecosta $9,605,180 $12,706,888 $15,866,708 65.2%
Monroe-Lenawee $10,523,924 $17,084,071 $17,359,665 65.0%
Montcalm $8,216,802 $9,077,380 $9,157,463 11.4%
Northern Lower Peninsula $38,844,209 $55,218,097 $64,923,673 67.1%
Oakland $187,756,208 $266,330,096 $254,799,019 35.7%
Ottawa-Muskegon $43,225,331 $56,021,755 $68,321,877 58.1%
Saginaw-Bay $58,173,232 $85,665,807 $87,476,601 50.4%
St. Clair $17,955,465 $21,852,019 $25,980,297 44.7%
Upper Peninsula $24,686,262 $37,342,452 $45,008,822 82.3%
Washtenaw $111,777,739 $156,931,044 $177,937,240 59.2%
Wayne $630,760,131 $804,878,054 $769,534,658 22.0%
Wexford-Ogemaw-Iosco $7,019,006 $10,046,244 $13,623,815 94.1%
Statewide Total $1,671,209,357 $2,265,985,912 $2,365,487,830 41.5%

Figure includes only hospitals with complete data from 2007 to 2011.

Source: CHRT, using Blue Cross Blue Shield of Michigan data, 2011

Unless Michigan decides to expand Medicaid in 2014, uncompensated care may rise further when the Affordable Care Act (ACA) is fully implemented in that year. Disproportionate Share Hospital (DSH) payments will be reduced starting in fiscal year 2014, due to anticipated reductions in the uninsured rate. DSH payments are federal funds used to subsidize hospitals that treat high proportions of uninsured patients, and are sometimes passed on to free and low-cost clinics. If Michigan chooses not to expand Medicaid, over 300,000 Michigan residents would remain uninsured, and the reduction in DSH funding will likely increase the financial burden of uncompensated care on hospitals.

Federally Qualified Health Centers

FQHCs were an important source of care for both the uninsured and publicly insured. In 2011, 29 FQHCs delivered care to over 500,000 patients at 133 different service delivery sites. The uninsured rate in Michigan increased from 10.2 percent in 2007 to a peak of 12.7 percent in 2009, before falling to 11.7 percent in 2011 as the economy improved. The Medicaid coverage rate increased steadily from 2007 to 2011, rising from 12.2 percent of the population in 2007 to 17.5 percent in 2011. The steady rise in the Medicaid rate was likely due to ongoing declines in private health insurance coverage during this time.

The changes in the uninsured and Medicaid rates were reflected in the insurance coverage of individuals seeking care at FQHCs in the state. From 2007 to 2011, the total number of uninsured and Medicaid patients increased, with the number of Medicaid patients increasing at a faster rate than the uninsured. In 2007, 37 percent of all patients using FQHCs had Medicaid coverage, while 35 percent of patients were uninsured. By 2011, the proportion of Medicaid patients increased to 44 percent of the total patient volume, and the proportion of visits by uninsured patients decreased slightly to 33 percent. Figure 2

Figure 2
Number and Proportion of FQHC Patients by Coverage Type, MI, 2007–2011*

Figure 2
  2007 2008 2009 2010 2011
  Number Proportion Number Proportion Number Proportion Number Proportion Number Proportion
Medicaid 167,006 37.4% 188,352 40.1% 210,891 41.0% 225,356 41.9% 240,545 44.0%
Uninsured 154,053 34.5% 151,613 32.3% 172,728 33.5% 184,890 34.4% 178,903 32.8%
Private 80,706 18.1% 80,813 17.2% 77,857 15.1% 75,786 14.1% 76,473 14.0%
Medicare 38,905 8.7% 43,199 9.2% 45,691 8.9% 49,134 9.1% 48,765 8.9%
Other Public 5,607 1.3% 5,480 1.2% 7,820 1.5% 2,681 0.5% 1,559 0.3%

* Data does not include FQHC look-alikes for this figure and all subsequent figures.

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

FQHCs also experienced reductions in the proportion of patients with private insurance, likely due to falling private insurance rates in the state. From 2007 to 2011, patients with private coverage fell from 18 to 14 percent of the total patient volume. The decrease in privately insured patients is noteworthy because private insurers have higher reimbursement rates than Medicaid, creating an important source of revenue for FQHCs.3

From 2007 to 2011, the number of patients served by FQHCs in Michigan increased by 22 percent (100,000 people). Figure 3 The total number of visits for medical, dental, substance use, and mental health care also increased from approximately 1.6 million to nearly 2 million during the same period. Figure 4 Visits to medical providers accounted for over 75 percent of all patient visits, followed by visits for dental care, mental health, and substance use.

Figure 3
FQHC Total Patient Count by Provider Type, MI, 2007–2011

Provider Type 2007 2008 2009 2010 2011
Medical 356,606 376,153 413,965 433,564 432,986
Dental 124,160 130,503 148,206 158,969 175,885
Mental Health 14,471 15,402 16,356 19,094 26,382
Substance Use 2,242 2,811 1,478 1,095 1,953
Total Unique Count 446,277 469,457 514,987 537,847 546,245

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

Figure 4
FQHC Total Visit Count by Provider Type, MI, 2007–2011

Provider Type 2007 2008 2009 2010 2011
Medical 1,218,999 1,303,748 1,439,446 1,502,659 1,479,690
Dental 290,709 300,886 350,974 364,373 394,410
Mental Health 38,205 42,299 45,247 59,087 87,206
Substance Use 10,076 12,762 15,593 11,116 11,151
Total Count 1,557,989 1,659,695 1,851,260 1,937,235 1,972,457

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

The increase in visits was not evenly distributed across provider types. From 2007 to 2011, visits to mental health providers increased by 128 percent, compared to increases of 36 percent for dental care, 21 percent for medical care, and 11 percent for substance use services. Research suggests that the stress caused by economic downturns contributes to increased demand for mental health care, especially among low income and unemployed populations, which could explain the substantial increase in visits to mental health providers.4

From 2007 to 2011, the average number of visits per patient remained relatively stable for medical, dental, and mental health care. However, the number of substance use visits per patient varied substantially during this time. From 2008 to 2009, the average number of substance use visits per patient more than doubled, from 4.5 visits per year to 10.6 visits per year, suggesting that patient needs increased dramatically during this time. The average remained high in 2010, but fell to 5.7 visits per patient annually in 2011. Figure 5

Figure 5
FQHC Visits per Patient by Provider Type, MI, 2007–2011

Figure 5
  2007 2008 2009 2010 2011
Substance Use 4.5 4.5 10.6 10.2 5.7
Medical 3.4 3.5 3.5 3.5 3.4
Mental Health 2.6 2.7 2.8 3.1 3.3
Dental 2.3 2.3 2.4 2.3 2.2

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

FQHCs in Michigan increased the number of full time equivalent (FTE) staff in response to the growing patient volume. Figure 6 From 2007 to 2011, the number of visits per FTE for medical and dental providers decreased slightly despite the increasing patient load, indicating that these providers may have been able to meet growing demand. For substance use providers, the number of visits per FTE increased by 63 percent from 2007 to 2009, suggesting that demand outpaced provider staffing during this period. However, from 2009 to 2011, the number of substance use visits per FTE fell below the 2007 ratio. Mental health was the only area in which the number of visits per FTE was higher in 2011 than in 2007. Figure 7

Figure 6
FQHC FTEs by Provider Type, MI, 2007–2011

Provider Type 2007 2008 2009 2010 2011
Medical 552.6 609.7 682.2 688.6 725.6
Dental 128.7 132.7 158.8 167.7 186.3
Mental Health 41.3 44.0 54.2 66.2 79.7
Substance Use 7.7 7.7 7.3 8.3 10.0
Total FTEs* 730.4 794.1 902.5 930.8 1001.5

* Data includes providers with attributed patient visits only (direct patient care).

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

Figure 7
FQHC Visits per FTE by Provider Type, MI, 2007–2011

Figure 7
  2007 2008 2009 2010 2011
Dental 2,259 2,268 2,210 2,172 2,117
Medical 2,206 2,138 2,110 2,182 2,039
Substance Use 1,307 1,666 2,136 1,336 1,121
Mental Health 924 961 835 892 1,094

Source: CHRT, using the HRSA Bureau of Primary Health Care Section 330 Grantees Uniform Data System, 2011

From 2007 to 2011, the total number of FQHC service delivery sites in Michigan increased by fifteen from 118 to 133.5 Six counties (Calhoun, Chippewa, Lake, Muskegon, St. Joseph and Wayne) lost at least one service delivery site during this time, while twenty two counties saw an increase in the number of service delivery sites (Arenac, Baraga, Berrien, Cass, Eaton, Emmet, Ingham, Ionia, Kent, Lenawee, Mackinac, Marquette, Menominee, Missaukee, Monroe, Montcalm, Newaygo, Oceana, Presque Isle, Saginaw, Washtenaw and Wexford). Fifty three of the eighty three counties in Michigan had at least one service delivery site in 2011.6 Figure 8

Figure 8
FQHC Service Delivery Sites, Michigan Counties, 2007 and 2011

Key: Numbers in each county represent the FQHC Service Delivery Sites operating in 2011.
Colors represent the change in number of FQHC sites (2007–2011).

Figure 8

3 Health Resources and Services Administration (HRSA). 2007–2011. Primary Care: The Health Center Program, Unified Data System. The data are available at: http://bphc.hrsa.gov/healthcenterdatastatistics/statedata/2007/MI/2007_MI_TOT_Summary_Data.html (accessed 5/5/13).

4 K. Zivin, M. Paczkowski, and S. Galea. July 2011. Economic Downturns and Population Mental Health: Research Findings, Gaps, Challenges and Priorities. Psychological Medicine 41(7): 1343–1348. http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=8280014 (accessed 5/24/13).

5 In addition to the FQHC service delivery sites there were seven FQHC Look- Alike sites operating in 2007 and ten in 2011. FQHC Look-Alikes are health centers that have been certified by the Centers for Medicare and Medicaid Services but do not receive funding from the Health Center Program.

6 Michigan Primary Care Association: 2007 and 2011 Membership Directory. Available at: http://www.mpca.net/associations/14191/files/directory_2007_guide.pdf and http://www.mpca.net/associations/14191/files/2011%20directory%20for%20web.pdf (accessed 8/26/2013)

Free Clinics

From 20097 to 2012, the total number of free clinics in Michigan remained unchanged at 75, but the geographic distribution of clinics in the state shifted. The number of operating clinics fell in 11 counties and increased in 11 other counties. Seven counties (Cass, Delta, Dickson, Huron, Iron, Luce, and Mackinac) lost their sole free clinic, while only three counties that did not previously have one gained clinics (Clare, Muskegon, and Sanilac).8,9 The Upper Peninsula was hardest hit: only two of the seven clinics operating in 2009 remained open by 2012, leaving few health care options for low-income and uninsured residents in northern Michigan. The majority of the newly opened clinics were located in southeast Michigan and the west side of the Lower Peninsula. Figure 9

Figure 9
Number of Free Clinics and Change in Number of Clinics in Michigan, 2009–2012

Key: Numbers in each county represent the free clinics operating in 2012.
Colors represent the change in number of free clinics (2009–2012).

Figure 9

Source: Free Clinics of Michigan, 2012

7 2009 data are the earliest available.

8 Blue Cross Blue Shield of Michigan. Clinics We’ve Supported (free clinic grant awardees). http://www.bcbsm.com/index/about-us/why-choose-us/healthy-communities/free-clinics.html?cq_ck=1352329345496 (accessed 2/20/13).

9 Free Clinics of Michigan. Free Clinic Directory. http://www.fcomi.org/clinics-by-county.html (accessed 2/19/13).

Conclusion

The economic recession from 2007 to 2009 accelerated the decline in private insurance coverage in Michigan, resulting in thousands more Michigan residents covered by Medicaid or becoming uninsured. As the economy improved in 2010 and 2011, the uninsured rate fell, but the Medicaid population increased and private insurance rates continued to decline. During this time, hospitals, FQHCs, and free clinics played an essential role in addressing the health care needs of the growing population needing free or low-cost services. These safety net providers increased staffing and service volume in response to the growing demand for care, especially the increase in mental health needs following the recession. Michigan safety net providers will continue to play an important role when the ACA is fully implemented in 2014. However, the financial burden on hospitals and safety net clinics will increase as DSH payments are reduced, unless Michigan decides to move forward with Medicaid expansion.


Suggested Citation: Traylor, Joshua and Udow-Phillips, Marianne. Safety Net Providers and Uncompensated Hospital Care in Michigan. Cover Michigan 2013. August 2013. Center for Healthcare Research & Transformation. Ann Arbor, MI.