NINA MOINI: After the passage of President Donald Trump’s massive tax cut bill, Minnesota health care providers are assessing the impact that cuts to Medicaid could have on their facilities and patient care. An analysis by health policy research nonprofit KFF found Minnesota stands to lose $23.5 billion in federal Medicaid funding over 10 years. That’s an 18% decrease. But for rural hospitals in Minnesota, where there’s a higher percentage of people enrolled in Medicaid, they could see an even bigger impact.

Joining me now to explain is Rachelle Schultz, president and CEO of Winona Health. Thank you so much for your time this afternoon, Rachelle.

RACHELLE SCHULTZ; Thank you, Nina. Good to be here.

NINA MOINI: Winona, as I understand, has several facilities, hospitals, clinics, long-term care, assisted living. Would you talk a little bit about– we mentioned in the intro– just how many of your patients are on Medicaid plans?

RACHELLE SCHULTZ; Sure. Yeah, we are a small community health system that really has those scope of services that you just mentioned. In the Winona County area, there’s about 8,000 people roughly that are on Medicaid. We have about 4,500 unique patients of that 8,000 that we serve across that spectrum of services,m so those that come in the hospital, ER services, in our clinics.

And the percentage probably differs a little bit. For example, in our long-term care, probably 70% of our residents in long-term care are on Medicaid. Then it’s a little less in the hospital because that’s just less of our business. But about 16% of our overall business is the Medicaid program.

NINA MOINI: OK. Yeah, and it’s hard for people, I think, to understand exactly how the idea of the reimbursements work. Could you just explain– it’s probably a lengthy process– but how exactly the passage of this bill and this law impacts those reimbursements that then, in turn, impact the work you’re able to do?

RACHELLE SCHULTZ; Sure. So Medicaid is actually a state and federal program. So the state puts up dollars. There’s also federal dollars that come into the state to make the pool of Medicaid dollars. And then to be eligible for Medicaid, this is an income-based program. So you have to meet certain income thresholds, being percentage of the poverty line, that type of thing, to be eligible for services.

And I think it’s also important for people to understand that, of course, I’m very interested in the health care side of it, what people need and how that is funded, how rates are set, and so forth. But there’s other programs and services that are often provided through Human Services and public health, through the counties, and things like that, that also use Medicaid dollars to fund those programs. So we get a set rate that we’re paid.

And Medicaid is what I would basically, characterize as the lowest-paying payer that we have. And the way to understand that is that we have a cost to provide care, not what we charge, but what our cost is. And if that’s $1, we get $0.68. So Medicaid is actually not funded at even what the cost of care is to provide that. But it is something. So it is funding that we do get, but it’s substantially below the cost.

NINA MOINI: One of the discussions around the bill and the cuts is about fraud and waste. And the Trump administration says they are really looking at different agencies and different programs really, to look for fraud and waste, talking about if people are actually eligible to be receiving the things that they’re receiving.

From your perspective, just with your access to patients every day, are you seeing a lot of waste or unqualified people or fraud? Or do you think a lot of that happens more on the billing end or in the health care system? What do you think about that?

RACHELLE SCHULTZ; Yeah, that’s this huge question on fraud, waste, and abuse. But I think fundamentally, to when somebody applies for Medicaid, it is not an easy application. I mean, it’s probably 13 pages long. And there is a lot of background information, income verification, and so forth and so on, and addresses.

So it’s not an easy application for people to fill out. And you have to be able to verify all of that information. So I don’t believe that there’s fraud necessarily going into that in terms of people applying for that program.

I think in the overall system of things, we know that there’s fraud, waste, and abuse in everything because we’re a very human-oriented industry, if you will. And so there’s always room for human error and things like that. But I don’t think that it would be intentional. I think it’s due to heavy regulation and probably even conflicting regulations at times that can cause confusion around that.

But I don’t think we’re going to find– my sense of it is I don’t think we’re going to find the savings that are anticipated. And I say that because when I look at even the people here who qualify for Medicaid, half of those people are children. And then you look at– then it’s single parent of children. Then it’s your disabled veterans.

So I think the targeted population for the fraud, waste, and abuse is who are able-bodied working folks. And I can tell you right now, there are working folks already that are on Medicaid, and we see them come in. They just are still at an income level where they can’t afford other insurance, and they qualify for Medicaid. So I think it’s a very small population, the targeted population, to maybe take out of the Medicaid program.

Yeah, thank you for your perspective on that. I just want to make sure people understand the reasoning behind why the cuts took effect. Are you looking at these cuts, which are going to be over years, over 10 or so years, are you already looking at plans to adjust the level of service that you all are able to provide in Winona, or the number of facilities that you’re able to have open? What is this meaning for you now versus down the line?

RACHELLE SCHULTZ; That’s one of the things that’s really tough for a rural hospital, because we’re here to take care of our community. There isn’t anybody else that’s doing it. And we’re often the safety net for the community. So the services that we provide are the needed services. And I think, as many of us have been struggling with the financial realities of post-COVID world and making ends meet and continued reduced reimbursement, really, across the board and rising other costs, it’s a hard calculation to make work.

And I would say, what becomes really difficult is that we can cut a program. But that doesn’t mean that the need goes away. And oh, by the way, that program goes away for everybody else that might have other insurance that could be covered with that program.

Here, specifically, my goal is not to have to cut any programs. But we are constantly looking at, where can we be more efficient? Where could we do some things differently? I think we have to really rethink the care delivery model.

I think that there might be more cost-effective ways to do it. There aren’t necessarily reimbursement streams to pay for that. And that’s a different conversation to have. And I think we need payers, and we need the government, and we need providers to all be talking about, how do we do this differently? And if that’s the funds we have, then how are we going to really look at this and disrupt maybe that model and still take care of people?

NINA MOINI: Now, you’re saying everybody is going to have to really put their heads together now. And I think you alluded to this briefly in your last answer. But I just want to make sure that before I let you go, if you could speak to cuts to Medicaid and how they might impact care to other patients, even if they’re not on Medicaid.

RACHELLE SCHULTZ; Right. So a couple of the types of programs– I mean, we’ve lost a number of programs already with just reimbursement constraints, I think, across the state. But you look at OB. We have OB deserts across the state. That’s a very costly program. And when 1 in 3 babies being born in the state is under the Medicaid program, losing those programs is a big issue.

And if you lose that OB program because of Medicaid, for example, you also lose it for everybody else in the community who might be on other types of coverage. Or mental health services might be another one. So when we cut things, we squeeze a balloon, and it just comes out in another place.

And that’s why I’m saying the need doesn’t go away. We have a whole community to serve. We can’t just carve out a population and say, we’re not going to take care of you. Or you can’t have the things that other people do. We service everybody who comes in through our doors. And if that means that we’re going to have uncompensated care, which is how we are looking at that, cuts to Medicaid will result in uncompensated care. We have to then try to figure out, what’s the math to make that work and keep our facilities open and our services here.

NINA MOINI: It sounds like a big challenge, and we hope that you’ll come back as things unfold, just to keep us posted on how you’re making it all work, especially in our rural communities. Thank you so much for your time, Rachelle.

RACHELLE SCHULTZ; Yes. Thank you, Nina.

NINA MOINI: That was Winona Health president and CEO Rachelle Schultz.