GOP Mega-Bill Passes House: Medicaid Cuts Loom Large for Providers and Patients

In a very close vote (215-214), the U.S. House of Representatives has passed President Donald Trump's "big beautiful bill,", a sweeping budget reconciliation package that proposes massive cuts to Medicaid.

The bill now heads to the Senate, where more debate and potential adjustments are expected.

A reduction of this magnitude could force facilities to scale back services, delay capital projects, or even close their doors. The Federation of American Hospitals has warned that such cuts would be "an existential threat" to safety-net hospitals that serve low-income and uninsured patients.

Medicaid is a critical revenue stream for hospitals, particularly those in rural and underserved areas. April Audain, CFO of Denver Health, noted at the recent HealthLeaders Exchange that "50% of Denver Health's patient base is Medicaid."

Many hospitals may face increased uncompensated care costs as more patients become uninsured or underinsured. Proposed cuts to the Supplemental Nutrition Assistance Program (SNAP) programs could also leave thousands of patients in additional financial distress.

Harming Patients

The proposed Medicaid cuts disproportionately affect vulnerable populations, including seniors, individuals with disabilities, and low-income families. Programs like home and community-based services (HCBS), which support long-term care for the elderly and disabled, are at risk. Eliminating or reducing HCBS funding could lead to institutionalization for many individuals who currently receive care at home, disrupting their lives and increasing healthcare costs.

The bill also introduces new eligibility requirements, including work mandates and increased out-of-pocket costs for beneficiaries above the federal poverty line. These changes could lead to approximately 7.7 million individuals losing coverage, according to the Congressional Budget Office.

Additionally, the bill bans Medicaid and CHIP from covering gender-affirming care for individuals of all ages, a move that has faced significant criticism from LGBTQ+ advocacy groups.

Medicare could also see about $500 billion in offsets to pay for the bill's $3.8 trillion in tax cuts.

For CFOs: Strategic Considerations

CFOs should adopt strategies to navigate impending financial challenges:

• Scenario planning: CFOs can develop multiple financial models to assess the impact of various Medicaid cut scenarios. This includes estimating potential revenue losses and identifying areas where cost reductions can be implemented without compromising patient care.
   
• Diversification of revenue streams: CFOs can explore alternative funding sources, such as expanding private insurance partnerships, exploring revenue opportunities through telehealth, or even seeking philanthropic support, to reduce reliance on Medicaid reimbursements.
   
• Advocacy and collaboration: CFOs can use their voice and engage with hospital associations and other stakeholders to advocate for the preservation of Medicaid funding. Collaborative efforts can amplify the voice of healthcare providers in influencing policy.
   
• Operational efficiency: CFOs can collaborate with CTOs to invest in technologies and processes that enhance operational efficiency, such as modern EHRs and data analytics tools, to reduce administrative costs and improve patient outcomes.
   
• Patient resources: CFOs can also ensure that programs and resources like financial counselors and public benefit coordinators are in place to help patients navigate high care costs. By investing in navigation resources that help patients access alternative coverage, such as ACA marketplace plans, community health initiatives, or local subsidies, hospitals can maintain continuous care while helping patients avoid falling through the cracks.
   
• Community engagement: CFOs can strengthen relationships with their communities. Community support can be instrumental in advocating for policy changes and securing alternative funding sources.