HCA warns investors about the cost of Medicaid cuts

The following article was published in the Florida Independent on August 6, 2011:

HCA warns investors about the cost of Medicaid cuts

By Travis Pillow

Hospital corporation HCA warned investors in a Friday filing that reductions in Florida’s Medicaid program could cost the company $50 million over the next year. 

The company’s latest financial report filed with the Securities and Exchange Commission, first reported by the News Service of Florida’s health care blog, also notes that Florida and Texas account for nearly two thirds of its uninsured patients. 

The disclosure offers an indication of the effects budget cuts to safety net programs can have on health care providers, and comes on the heels of a decision by the Florida Medical Association, which represents the state’s doctors, to oppose a plan to shift the state’s Medicaid program to a managed care system, which HCA notes could also be costly to hospitals. 

The full filing can be found here. Here’s a relevant excerpt (line breaks added): 

Since most states must operate with balanced budgets and since the Medicaid program is often a state’s largest program, some states can be expected to enact or consider enacting legislation designed to reduce their Medicaid expenditures. The current economic environment has increased the budgetary pressures on many states, and these budgetary pressures have resulted, and likely will continue to result, in decreased spending, or decreased spending growth, for Medicaid programs and the Children’s Health Insurance Program in many states. 

For example, in May 2011, the Florida legislature passed a budget agreement for the fiscal year beginning July 1, 2011 that would reduce Medicaid reimbursements to hospitals. As a result, we estimate that Florida Medicaid payments to our hospitals may be reduced by approximately $25 million in the second half of calendar year 2011 and by another approximately $25 million in the first half of calendar year 2012. 

The Health Reform Law provides for material reductions to Medicaid DSH funding. Further, many states have also adopted, or are considering, legislation designed to reduce coverage, enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance or expand the states’ Medicaid systems. Effective March 23, 2010, the Health Reform Law requires states to at least maintain Medicaid eligibility standards established prior to the enactment of the law for adults until January 1, 2014 and for children until October 1, 2019. However, states with budget deficits may seek a waiver from this requirement to address eligibility standards that apply to adults making more than 133% of the federal poverty level. 

The Health Reform Law also provides for significant expansions to the Medicaid program, but these changes are not required until 2014. In addition, the Health Reform Law will result in increased state legislative and regulatory changes in order for states to comply with new federal mandates, such as the requirement to establish Exchanges, and to participate in grants and other incentive opportunities

Find this article here:  http://floridaindependent.com/42579/hca-warns-investors-about-the-cost-of-medicaid-cuts