Mental health care is limited in rural Minnesota. It’s also most vulnerable to Medicaid cuts.

Fairview Range Medical Center had an eclectic mix of 20 patients in its inpatient psychiatry unit in Hibbing on Thursday: Half were local, but seven lived 200 miles away in the Twin Cities. Ten sought help for problems like depressive lows or suicidal thoughts, while the others had court-ordered treatments.

The one thing most of them had in common: Medicaid was paying their bills.

The publicly funded health insurance program is essential to the survival of Range’s psychiatric unit, which is increasingly critical to Minnesota and its shrinking behavioral health system. The 34-bed unit admits more than 800 patients each year, making Fairview Range the 11th-busiest inpatient psychiatric hospital in Minnesota and the largest by far among non-metro hospitals

“Medicaid is just a lifeline for our patients, our community,” said Jean MacDonell, chief executive of the hospital, which is part of M Health Fairview.

The unit also could be the proverbial canary in the coal mine when it comes to the impact of Medicaid cuts, which were approved by Congress last week and signed into law by President Donald Trump. Hospital leaders said they are still figuring out what cuts were approved in the 900-page federal budget legislation and how they might affect health care access, but history suggests any cuts will have an impact on mental health providers and their patients.

“Behavioral health is sometimes where the untoward affects of changes in health care can show up first,” said Dr. Daniel Hoody, chief medical officer of Sanford Health Bemidji, which operates a 12-bed inpatient psychiatric unit.

Of particular concern are new requirements for some Medicaid recipients to offer proof of recent work or volunteer service in order to maintain benefits. An analysis by KFF, a Washington, D.C., health policy organization, found many patients with mental disorders will be subject to those requirements.

Proving work history could be difficult for people struggling with a mental health crisis or experiencing psychotic symptoms for the first time, said Robin Rudowitz, director of KFF’s Medicaid program. Lawmakers created exemptions for people who have severe medical conditions or emergencies, but proving they qualify for those exemptions might be difficult as well.

“There could be lapses,” she said. “People could fall through the cracks and that could certainly affect hospitals.”

The budget bill sought to cut as much as $1 trillion in Medicaid spending over the next decade to finance tax relief and other priorities of the Trump administration.

Republican lawmakers created a $50 billion rescue fund to help hospitals manage the cuts, and that could produce $100 million to $200 million in total over the next five years to help rural Minnesota hospitals, according to the Minnesota Hospital Association. However, the legislation capped so-called directed payment programs by which hospitals pay taxes to their states to trigger much larger federal Medicaid reimbursements in return.

Minnesota is pursuing a statewide directed payment program for the first time this year to support its hospitals, and at one point projected Fairview Range would gain $10 million per year. That amount would have prevented the hospital from losing money in each of the last three years. The federal changes mean that Fairview Range will make far less.

U.S. senators concerned about the impact of Medicaid cuts highlighted Range as one of two Minnesota hospitals at risk for closure. The listing surprised Range’s leaders, because other Minnesota hospitals are showing more signs of financial stress, but they assumed that it had to do with its relatively large psychiatric unit.

About 20% of Fairview Range’s patients overall are covered by Medicaid programs, known as Medical Assistance and MinnesotaCare in Minnesota, but that rate balloons to 75% for patients in the psychiatric unit.

The 20 patients in the unit on Thursday included four who were diverted to separate intensive care rooms because they presented risks to themselves or others. The remainder were split in two wings, participating in group goal-setting and therapy sessions, exercising, doing jigsaw puzzles and watching TV together.

“Everyone is sort of in it together,” said Dr. Glen Rebman, the hospital’s psychiatry chairman.

Alternatives have declined as small hospitals have lost psychiatrists and struggled to replace them. Lake Region Healthcare in Fergus Falls closed a 14-bed psychiatric unit for voluntary admissions last year. Lakewood Health System in Staples closed a 10-bed unit that specialized in geriatric psychiatry.

“We need to be able to sustain those services” at Fairview Range, MacDonell said. “We have a lot of people depending on us for those services.”

Medicaid cuts could hit hospitals in different ways. Even temporary disruptions to insurance benefits can cause patients with mental health disorders to spiral, said Cheryl Hennen, Minnesota’s long-term care ombudsman. She recalled how one such disruption caused a young man to stop taking medications. He lacked the wherewithal to restore benefits and ended up in emergency care because of suicidal urges.

“These cuts could lead to reduced access to care, increased financial burdens, and ultimately, worse health outcomes,” she said.

Under federal law hospitals are obliged to treat patients who show up in emergency rooms, even if uninsured. But absorbing the costs of their uncompensated care could have consequences. Patients often leave Range’s psychiatric unit with a month or two of prescribed medications to make sure they get started on them. Rebman said the hospital also spends hundreds or even thousands on taxi services to help patients get back to homes across the state.

Uninsured patients often can’t get into residential treatment centers that require Medicaid coverage, he said, even if they would benefit from it after hospitalization. Many are stabilized and discharged without recommended follow-up care, increasing the chances of future emergencies.

Two patients in the psychiatric unit Thursday were uninsured but likely eligible for Medicaid. Fairview Range often helps such patients apply, and increased the number of workers providing that support at the end of the COVID-19 pandemic, when everyone lost presumptive eligibility and had to re-enroll.

MacDonell said the hospital may need to staff up in anticipation of more people needing that help again. The hospital has been aggressively recruiting and expanding its surgery services, she added, which will hopefully create new revenues to offset Medicaid losses.

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