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Medicaid payments under threat as COVID pummels state budgets

21 Sep 2020 8:25 AM | AIMHI Admin (Administrator)

Modern Healthcare source article | Comments courtesy of Matt Zavadsky

Many have expressed concern about the shifting payer mix, as well as the impact of the pandemic on state and local budgets. 

This will likely be the 2nd wave of the economic storm for healthcare providers.

In states where EMS agencies enjoy “GEMT” payments, there is even concern about the ability of those programs to continue under the current economic climate.

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Medicaid payments under threat as COVID pummels state budgets

MICHAEL BRADY

September 19, 2020

https://www.modernhealthcare.com/medicaid/medicaid-payments-under-threat-covid-pummels-state-budgets

Like many hospitals struggling to cope with the financial fallout of the COVID-19 pandemic, University Medical Center of Southern Nevada has made tough decisions and reevaluated its business strategy to survive.

The Las Vegas hospital has gotten federal relief funding, but “it’s just not enough” to offset increasing care costs and declining revenue, UMC CEO Mason Van Houweling said. The hospital’s fortunes are deeply intertwined with the state’s tourism-heavy economy, which has been hammered for the past six months as casinos shuttered, and conferences were canceled.

UMC’s supply budget has more than tripled since the outbreak began, and it recently offered voluntary buyouts to staff members to rein in its growing labor costs. It also curtailed investments in new capital projects over the next five to 10 years, even though its finances were on solid footing before the pandemic hit the U.S. The hospital reported $691 million in operating revenue and a total profit margin of 4.3% in fiscal 2019, according to a Modern Healthcare analysis of CMS cost reports.

Now reductions to Nevada’s Medicaid program threaten to cut UMC’s finances even closer to the bone. Nevada lawmakers agreed to a 6% across-the-board rate reduction during a special session in July to help close a $1.2 billion budget shortfall, saving the state $53 million, and with the loss of federal matching will cost providers more than $100 million. It’s the largest cut to Medicaid provider rates any state has made since the pandemic began and a massive blow to Nevada’s largest public hospital.

“The new proposed rate puts us back to 2001 levels,” Van Houweling said.

With Medicaid enrollment snowballing and tax revenue falling off a cliff thanks to the pandemic, many states are sharply reducing their Medicaid spending to balance their budgets.

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