3 Dos and Don'ts of Medicaid Work Requirements

Hospitals should take action in the face of shrinking Medicaid rolls and revenue loss.

With Medicaid work requirements a reality or looming in many states, hospitals face the possibility of taking a financial hit from shrinking Medicaid rolls.

A Commonwealth Fund study released earlier this month estimates that Medicaid work requirements could contribute to an increase in uncompensated care costs for hospitals across 15 states that have implemented the mandates, or hope to, totaling between $2.5 billion to $3.7 billion in 2019.

Researchers said that the financial impact would go beyond revenue loss.

"It's important to see that it's not just a drop in the revenue, but it's also an increase in expenses," Melinda Abrams, M.S., vice president and director of the Commonwealth Fund's Health Care Delivery System Reform program, tells HealthLeaders.

While it would be easy for hospitals to have a knee-jerk reaction to such changes, Abrams believes there are things they can do to ease the pain, as well as things they shouldn’t do.

Here are three dos and don’ts for dealing with Medicaid work requirements.

1. Do collaborate with community partners
 

Even when patients do meet Medicaid work requirements, there's a lot of paperwork involved to prove it.

"There's no question that part of this is about how complicated it is actually to meet some of the documentation requirements," Abrams says.

That's why she believes there's an opportunity for hospitals to collaborate with local community partners to support patients, help them clear complex documentation hurdles, and ensure that as few people as possible are disenrolled.

2. Do document how it's affecting your organization and the community
 

Hospitals "play an important role and have an important voice in their communities," Abrams says. 

That's why she recommends that hospitals affected by Medicaid work requirements take the time to document and track the financial impact that the changes are having on their Medicaid revenues, uncompensated care rate, and operating margins, and sharing those consequences with stakeholders in the community, as well as with policy makers.

A hospital's losses may also have a ripple effect beyond the walls of their own organization.

"Many hospitals are the economic engine in the entire community," Abrams says, and their financial wellbeing affecting everything from local employment to the financial performance of nearby restaurants.

3. Don't stop investing in innovation
 

While Medicaid expansion has given some hospitals the resources to invest in infrastructure, work force, new technology, and patient care innovations, Medicaid work requirements will likely have the opposite effect, Abrams says.

While it might be tempting for hospitals with narrower margins to say they can't afford such programs, Abrams hopes they'll continue pursuing innovations like increased telehealth, home-based care, proactive risk stratification, and complex care management programs.

"What I would hope is they don’t stop implementing and investing in some of these innovations and new approaches for patients," she says. "I think those things actually help save them money and help the whole community."