Preparing your institution for Medicaid cuts

Prepping for more uncompensated care at safety net facilities

Many clients served are smaller provider organizations, including those delivering services through Community Health Workers and clinically-oriented Community Health Centers or larger acute care facilities. As states prepare for significant Medicaid program changes, these providers must plan for rising uncompensated care and resulting stress on patients and staff.

The impact of Medicaid cuts will not be distributed equally across communities. Enrollment losses often follow existing social and economic disparities, with rural areas and communities having limited healthcare infrastructure facing disproportionate effects.

The Rising Tide of Uncompensated Care

According to recent analyses, the healthcare system faces substantial uncompensated care cost increases:

• The Urban Institute and Robert Wood Johnson Foundation forecast an $18.9 billion increase in uncompensated care costs
• Additional RWJF analysis indicates a $19 billion surge following Federal Medical Assistance Percentage elimination

Community Health Centers and Federally Qualified Health Centers will experience the full force of these cuts. These safety net providers prepare for greater resource and staff strain, but addressing potentially unforeseen impacts from dramatic coverage swings remains challenging.

Many patients may not know they are uninsured

Following Medicaid unwinding, significant discrepancies emerged between official enrollment numbers and people's coverage awareness. Recent research findings indicated:

• CMS data showed a 5.2 percentage point Medicaid coverage increase from 2019-2022, while survey respondents reported only a 1.3 percentage point increase
• Children demonstrated the largest awareness gap—actual enrollment exceeded family survey reports substantially
• The gap was smaller in recently-expanded Medicaid states, suggesting active enrollees possessed greater coverage awareness
• Many reported holding multiple coverage types simultaneously, indicating confusion about primary coverage sources

These findings suggest many maintaining Medicaid coverage during the pandemic remained unaware of their continued coverage, potentially creating challenges as states review eligibility. Similar impacts will likely occur as eligibility requirements shift and coverage terminates.

CHCs and FQHCs routinely provide care for uninsured individuals and those believing themselves insured but lacking actual coverage. This phenomenon will increase; however, these providers continue delivering services as a core mission component.

Moving Forward: Essential Considerations

Healthcare providers, particularly safety net organizations, must build organizational consensus addressing coming challenges:

• Fixing referral network gaps with community partners to prevent recoverable revenue loss, potentially including new billing solutions or case management-electronic medical record system integration
• Seeking low-cost financing options for uninsured patients and identifying partners providing medical debt relief resources
• Training staff to handle increased emotional responses from patients discovering coverage loss

As changes unfold, healthcare organizations must remain adaptable while maintaining care access and managing increased uncompensated care's financial implications. Historically, safety net providers possessed significant exposure to these issues, though coming changes' magnitude will likely prove unprecedented.