Changes in Hospital Uncompensated Care Following the Texas Medicaid Waiver Implementation

Abstract

In 2011, Texas implemented an 1115 Medicaid Waiver in lieu of Medicaid expansion. This study assesses changes in hospital uncompensated care percentage (UCP) and measures the effect of the delivery system reform incentive payment (DSRIP) initiatives, using two payment variables (Category 1 and 2 payments and Category 3 payments) on UCP between 2012 and 2016. Data were obtained from the American Hospital Association for 2011 to 2016 and from Texas Health and Human Services for 2011 to 2015.  A mixed-effects model was used to estimate the association between DSRIP funding and changes in UCP the following year.  Independent variables included Fiscal Year, Bed Size, Underfunded Patient Mix, and DSRIP earned funding amounts.  The study found DSRIP funding for Category 3 (outcome-based measures) was significantly associated with decreased UCP. Category 1 and 2 payments, which primarily funded infrastructure, were not significant; however, they are necessary to achieve Category 3 outcomes. These results indicate UCP can be decreased through funding achievements in Category 3 outcomes. This is promising for CMS and Texas as Texas implements waiver 2.0, which is structured to pay for large-scale improvements in health outcomes.