What Can a Proactive Hospital Do, When Faced with Disastrous Medicaid Cuts?

I had an intense “déjà vu” experience this past weekend. The Fourth of July comes with various traditional holiday weekend festivities. One tradition my family has for this particular holiday weekend is a family reunion. Scheduled during (or immediately after) every Fourth of July, the Jones family gets together to eat, drink, and take lots of pictures. 

Inevitably, at some point during the weekend, I find myself thinking, “how is it possible that I am related to some of these people?” I mean, I know that I share a common genealogy with most of them, although some, of course, are part of this Jones cohort because of marriage or friendship. 

But other than the last name, common strands of DNA, or having the (arguably) mixed judgment to join this group voluntarily, I think you would have trouble finding a common thread to tie more than six of the 60 attendees together. There are different ages, different interests, different beliefs, different fashion sense (I don’t get camouflage). I often think that I should have parked in a different picnic grove and joined another family’s outing.

I had this same feeling watching CNN last week as the Senate, and then the House of Representatives, verified the GOP 2025 Federal Budget Reconciliation Bill. Who were the men and women who voted for this bill? We are apparently not from the same tribe.

This is the bill that will reduce federal Medicaid and Children’s Health Insurance Program (CHIP) spending by roughly $1.02 trillion from 2025 through 2034. The Congressional Budget Office (CBO) projects 10-11 million fewer Medicaid enrollees by 2034, with reductions driven largely by work‑reporting requirements, more frequent eligibility checks, provider‑tax restrictions, and other compensation limits. 

How could these American political leaders vote in favor of a bill with the potential to devastate hospitals and their communities? I again felt like I had parked in the wrong picnic grove and been thrown in with the wrong family.

Now that the deed is done, hospitals are faced with the need to develop strategies to survive serious reductions to their revenue, at a time when each dollar collected could mean the difference between continuing the provision of healthcare services or turning out the lights and locking the doors.

It is projected that Virginia, Louisiana, and Washington will be hit the hardest by the Medicaid cuts. According to the American Hospital Directory, Oklahoma has 170 hospitals. Do you know how many of these hospitals have fewer than 100 beds? The vast majority of them, 141. These places will be hit hard by Medicaid and Marketplace coverage cuts.

In Pennsylvania, where most of the hospitals in my health system are, it is projected that 300,000 will lose Medicaid eligibility – roughly the entire population of Pittsburgh. This is on top of the 800,000 to 900,000 who lost their Medicaid in the state after the “unwinding.” The impact of the Budget Reconciliation Act on the Marketplace insurance plans will cause another 300,000 people to lose their Marketplace insurance. The safety net of Pennsylvania’s hospitals that serve the poor and underserved could be greatly diminished.

There are tactics that other stakeholders can take. Hospital associations, advocates, and lobbyists are urging Congress to delay the implementation of job requirements beyond the scheduled January 2026 implementation date. 

States can also file 1115 and 1332 waivers in an attempt to modify the planned work requirements, or to preserve eligibility for certain targeted populations. States can also incentivize their Managed Care Organizations to be actively involved in the re-enrollment of their beneficiaries.

Employers small and large can take advantage of the cost savings and tax incentives to establish the newly established Individual Coverage Health Reimbursement Arrangements (IC-HRAs) or Qualified Small Employer Health Reimbursement Arrangements (QSE-HRAs) to provide insurance for previously uninsured, part-time, low-wage, and/or unengaged employees and their families. 

Hospitals have few proactive steps that they can take. Yet one thing that hospitals can do now is to create a link between our uninsured patients and work opportunities. 

I’m not sure what existing hospital department can effectively take charge of this initiative. It may be different departments at each hospital. Because the definition of “work” in the Budget Act includes education, training, and volunteerism, hospitals have the opportunity (actually, the challenge) of connecting their uninsured patients with church groups and other community service organizations that run food banks, soup kitchens, and community improvement projects. County-sponsored full-time employment connections, job training programs, and job boards may become a routine part of the Medicaid screening process.   

The most effective tactic that hospitals can take right now may be to target revenue leakage. Any institution that is not conducting a Medicaid eligibility program seven days a week for inpatients, and 24/7 in the emergency room, may need to consider what expanded coverage will mean to their Medicaid revenue. 

The handoff of patients who do not qualify for Medicaid to charity care, financial assistance, and account financing teams will lessen the increase of bad debt. 

The accurate identification and billing of all primary and secondary insurances will require enhanced focus by registration and financial clearance teams. Point-of-service (POS) collection will be more important than ever. Taking charge of the coordination-of-benefit denials can be impactful in increasing cash flow and decreasing bad debt.

Politics is like a pendulum, periodically swinging from left to right. Hopefully, if hospitals can withstand these next few years, the political climate and the economic environment will change.

At my family reunion, I had to show the disbelievers that Magic Hat IPA was actually better than Iron City Light Beer. I had to provide the BBQ chicken to show everyone that we didn’t have to eat hot dogs and venison burgers. Maybe with hard work and the right amount of time, we’ll be able to show our rowdy neighbors and other-side-of-the-family politicians that providing healthcare services to the poor benefits everyone – and providers should always be paid for the care they provide.

https://www.kff.org/tracking-the-medicaid-provisions-in-the-2025-budget-bill/