Becker's Hospital Review

10 CFO / FINANCE Hospitals can't afford to be 'reactive' on policy changes By Alan Condon Hospitals and health systems are navigating a period of unprecedented financial uncertainty as proposed changes at both the state and federal levels threaten to reshape reimbursement structures, disrupt funding mechanisms and jeopardize long-term financial stability. While hospital leaders across the country are closely monitoring these developments, a passive or "reactive" approach could leave organizations vulnerable to major financial shocks, according to a March 25 report published by Kaufman Hall. e recent budget resolution passed by the House has triggered policy discussions that could significantly reduce Medicaid funding. e House Energy and Commerce Committee, which oversees Medicare and Medicaid, has been tasked with reducing federal spending by $880 billion over the next decade. Potential measures include: • Medicaid work requirements • Lower federal rate payment floors • Changes to graduate medical education funding • Site-neutral payments for Medicare At the same time, hospitals are contending with additional financial headwinds. e National Institutes of Health has proposed caps on indirect costs for research grants — posing a threat to the financial stability of academic medical centers. While a federal judge has issued a preliminary injunction against these cuts, the final outcome remains uncertain. Meanwhile, potential tariffs on medical supplies could further squeeze hospital budgets. "For healthcare finance leaders, the current financial uncertainty is resurfacing memories of the onset of the COVID-19 pandemic in 2020 and the 2008 financial crisis, both instances where providers had to react to massive financial changes in a short period of time," Kaufman analysts wrote in the report. "And unlike the short-term financial dislocation of the initial severe impacts of COVID-19 — when providers were forced to sideline outpatient operations and other services for several months — the duration of these proposed policy changes is highly uncertain." While many hospital leaders are concerned, few are certain how to proactively respond. However, a "wait-and-see" approach may leave hospitals exposed — particularly if they haven't accounted for potential drops in supplemental federal funding, increased self-pay volumes or shis in reimbursement, according to the report. Rather than waiting for policy changes to take effect, Kaufman Hall argues health system leaders must engage in scenario planning to evaluate potential impacts and develop strategic responses. By modeling different policy outcomes, hospitals can assess financial risks, adjust capital plans and identify operational efficiencies to offset potential revenue declines. Key considerations for financial planning include: • Identifying factors driving financial uncertainty and evaluating their impact on sustainability. • Assessing potential political and regulatory outcomes that could affect financial operations. • Analyzing how changes in Medicaid, Medicare and other funding sources will affect a hospital's operations and balance sheet. MU Health Care, Anthem BCBS split By Rylee Wilson C olumbia, Mo.-based MU Health Care will be out- of-network with Anthem Blue Cross Blue Shield, effective April 1. The split affects Anthem Medicare Advantage, commercial and ACA plan members, according to a statement from MU Health Care. In an open letter to Stephanie Vojicic, president of Anthem BCBS of Missouri, MU Health Care CEO Ric Ransom said Anthem's offer was "inadequate." "Our responsibility to the people of Missouri requires us to run an academic health system that is financially sustainable and able to serve as the safety net for a significant part of the state long into the future," Mr. Ransom wrote. "MU Health Care wants this impasse to be resolved, but will not risk our financial well-being based on Anthem's inadequate offer." In a statement to ABC affiliate KMIZ, Anthem BCBS said its proposal included "reasonable payment increases." "MU Health Care's proposed price increases would increase healthcare costs many times faster than wage growth for Missouri consumers," a spokesperson said. "We cannot agree to price hikes of this magnitude for our members. Standing up for affordable care for all Missourians is part of our mission." MU Health Care recently renegotiated a contract with UnitedHealthcare. The network split does not affect Medicaid members or University of Missouri student health plans, MU Health Care said. Patients with certain chronic conditions may qualify for continuity of care coverage from Anthem. MU Health Care, the University of Missouri's academic health system, manages more than seven hospitals, 80 clinics and 1,200 providers. n

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