Medicaid Financing Techniques to Bridge Hospital Funding Gaps

Hospitals that serve Medicaid and uninsured populations often experience funding shortfalls that can overwhelm facilities and compromise the care of a community’s most vulnerable populations. Innovative Medicaid financing programs for hospitals can help fund health care services for those who need them most and shore up finances for these facilities over time.

Medicaid populations are among the most vulnerable when it comes to accessing health care, and since the beginning of the pandemic, the number of Medicaid patients nationwide continues to grow. Medicaid expansion has caused many hospitals–even those with small numbers of Medicaid patients historically–to review and evaluate their finances as population needs outstrip available resources. Urgent care, emergency rooms, and inpatient beds are maxed out in many urban and suburban hospitals that didn’t have these issues 10 years ago.

Care and funding gaps, further exacerbated by COVID-19, have developed; hospital finance executives, along with states, and other providers are looking for solutions.

The good news is that financing solutions do exist that can bridge funding gaps. Innovative funding programs have been designed and implemented for hospitals in many states around the country.

Medicaid Populations Can Add Pressure to Hospital Finances

Low Medicaid reimbursements for hospitals combined with increasing Medicaid populations can cause many challenges for hospitals.

Chronic health conditions as well as housing and food insecurity and lack of transportation can make treating Medicaid and uninsured populations more difficult.

Thoughtful and meaningful Medicaid financing programs can be helpful in addressing these clinical needs and social determinants of health.

Hospital Medicaid Financing Programs Gain Momentum, Close Funding Gaps

Bringing supplemental funding to bear on emergent issues requires out-of-the-box thinking combined with technical, policy, and political know-how so that hospitals have what they need to help those who need their care.

New Jersey is a recent success story, having obtained CMS approval for the County Option Hospital Fee Pilot Program Act which has allowed hospitals, counties, and the State to work together to achieve significant results that will deliver over $400 million in its first year to more than 40 hospitals. The supplemental funding provides hospitals with a new revenue stream to enable increased access and higher-quality care for Medicaid enrollees.

Designing and Delivering Innovative Medicaid Funding Programs for Hospitals

Navigating the complexities of program design, CMS approval and implementation requires thorough preparation and a deep understanding of hospital Medicaid financing. While the process can be complex, addressing the following basics is a good place to start:

• Define and quantify the need. Good diagnostics are required to lay the foundation for any proposed supplemental financing solution. Identify funding gaps and areas for quality improvement.
• Design the plan. Clearly identify how increased dollars will improve access to high-quality health care services for low-income populations and align with state priorities. Include key performance indicators and metrics for success. Make sure all stakeholders—hospital executives and state and federal officials—understand the benefits.
• Gain support and win approval. Develop a proposal detailing the desired outcomes. Appeal to each stakeholder group with a customized message that leads with their most pressing concerns—and how your proposed solution aligns with their priorities.
• Implement. Work with key stakeholders to ensure smooth operation and regular review of key performance indicators.
• Communicate Impact. Transparent reporting on results should take place regularly and focus on progress toward the desired outcomes. Sharing results can highlight the importance and value of these financing mechanisms.

In Summary

Most hospitals—not just safety-nets—are facing growing pressure to take care of more patients, improve healthy equity, and deliver better quality outcomes. In many cases, the financial, clinical, and social resources can’t keep up with the demands of Medicaid expansion and the increase in uninsured populations.

New hospital Medicaid financing and supplemental payment concepts can bridge the gap and provide relief to affected hospitals and the communities they serve. They take time and expertise to design, plan, and launch, but the results can create stronger hospitals, easier access to care, and healthier communities.

If you’d like to learn more about our Medicaid financing services, please contact the Medicaid financing experts at Sellers Dorsey.