Medicaid has historically been HCA Healthcare's "most challenging payer" but the health system is anticipating a $200 million to $400 million boost from Medicaid supplemental payment programs in 2024, CFO Mike Marks said July 23 during the health system's second-quarter earnings call.
"[This year] we thought we would have a headwind of $100 million, $200 million for Medicaid supplemental payment programs," Mr. Marks said. "As we've gotten deeper into this year, we're now kind of changing that or updating that to a $100 million to $200 million tailwind. If you think about that flip of $200 million to $400 million, much of that already occurred in the first half of '24. If you think about the back half of '24, what we're expecting for supplemental payment programs will look pretty similar to what we had in the back half of 2023."
States use Medicaid supplemental payment programs to provide additional funding to hospitals and other providers that serve a significant number of low-income patients.
Initiatives including disproportionate share hospital payments, upper payment limit programs and provider tax and fee programs are designed to ensure these providers can cover the costs of care for Medicaid beneficiaries, which often exceed the standard Medicaid reimbursement rates.
"Over the last several years, most states in which we operate have implemented or enhanced Medicaid reimbursement through supplemental payment programs," Mr. Marks said. "While these supplemental programs are growing, it is important to put them in context. They can be complex, variable in their impact from quarter-to-quarter and when taken together with historical Medicaid reimbursement are still well short of covering the cost to treat Medicaid patients."
HCA said it found CMS' new rule on Medicaid supplemental programs to be a positive change and one that supports providers.
In the second quarter, HCA saw about a $125 million year-over-year earnings increase related to its Medicaid supplemental payment programs driven primarily by the new program in Nevada and the accrual of the Florida program, which began in the fourth quarter of 2023.
"We do see good sustainability around the Medicaid supplemental payment programs," Mr. Marks said. "They're well supported historically, both in red states and blue states. And frankly, two of our biggest programs are in Texas [and] Florida."