Survival Strategies Include Bold Initiatives

By: Paul R. DeMuro, PhD, JD, MBA

and

Richard M. Klass, MBA

The recently enacted federal Medicaid policy changes as part of the One Big Beautiful Bill Act (OBBBA) will affect all state healthcare providers and not-for-profit community agencies, including South Florida healthcare stakeholders who serve a large uninsured population. These changes will adversely impact local municipalities, safety-net hospitals, and rural hospitals, which will face increased financial responsibility for providing care to uninsured patients.

  • The OBBBA sets limits on healthcare taxes imposed by nearly every state on providers or managed care plans. These taxes generate revenue for supplemental Medicaid payments, and mostly benefit hospitals, but may also support other provider types.
  • At stake in Florida is a portion of the $3.4 billion in provider taxes collected. Of this amount, Dade-County hospitals received $662 million; Broward hospitals, $360 million.1

Community hospitals and other providers may cut or stop care for uninsured patients due to limited finances or operational priorities.

With OBBA Medicaid reform taking effect after December 31, 2026, healthcare providers must prepare for increased uninsured patient volume. Financial stability will depend on good strategic planning, political partnerships, and mitigation efforts.

Mitigation Strategies – Taxes

One immediate opportunity is assessing local property tax surcharges and the related millage rate property owners pay annually to support medical care for the uninsured.

  • In south Florida, the North Broward (Broward Health) and South Broward (Memorial Health System) Hospital Districts are two examples of systems that benefit from local property tax surcharges.

Another option is collecting additional sales taxes that support healthcare initiatives. In Florida, local governments can collect additional sales taxes that support healthcare initiatives. Local jurisdictions may impose an additional 1.5% levy on top of the state sales tax of 6%. Jackson Health System in Miami-Dade County, for example, receives funds from a half-cent sales tax approved in 1991.

Mitigation Efforts – Providers

A “low hanging fruit” opportunity is helping Medicaid enrollees keep coverage. The OBBBA mandates that Medicaid enrollees aged 19-64 work or participate in qualifying activities to maintain coverage, but many have difficulty documenting compliance. Consequently, health systems should:

  • Establishing support programs or partnerships with non-profit organizations to assist Medicaid enrollees in:

– Meeting work or qualifying activity requirements.

– Prepare and timely file necessary documentation.

Investing in and growing data analytics capabilities will support efforts to deliver quality, appropriate, and cost-effective care to uninsured populations. Data analytics provides a basis for understanding patient population needs and designing cost management programs that include systems for monitoring care utilization and resource expenditure.

A sustainable survival strategy must include an integrated population health management and managed care model for uninsured patients, replacing the current fragmented system that struggles to control costs. Leveraging data analytics, AI, partnerships with local nonprofits, and managed care expertise can create innovative solutions for improved outcomes and cost efficiency.

  • Novel provider relationship strategies that use provider capitation models and care provision in lower cost of care sites should be incorporated into cost-control efforts.

Mitigation Efforts – Addressing Social Determinates of Health

Addressing the social determinants of health is essential for effective population health management. Establishing an internal social work department provides patients with access to comprehensive, cost-saving services. The social work team can:

  • Coordinate temporary housing, shelter, or transitional accommodations, and provide necessities such as winter clothing or footwear, particularly when discharge presents challenges.
  • Recommend community resources, including food banks and organizations dedicated to supporting individuals from lower socio-economic backgrounds.

Partnering with social service agencies and community resources is essential. For example:

Consider:

  • A European model provides social services aimed at reducing care costs. The approach involves assessing the subject population so that providers and community partners can determine which services to deliver directly, procure from the community, coordinate, or pursue through joint ventures. Potential services include support programs and partnerships with community-based nonprofit organizations.

The OBBBA presents significant challenges. Accordingly, it is paramount to develop constructive, data-driven solutions that prioritize maintaining your patient’s Medicaid eligibility and managing the costs associated with uninsured patients. This necessitates a thorough evaluation of current and potential resources within your community, and the application of innovative strategies. Demonstrating adaptability and refining approaches as new information and rules emerge remains essential for success.

Paul R. DeMuro, Counsel, Katten Muchin Rosenman LLP, can be reached at paul.demuro@katten.com.

Richard Klass, President, 2CY, Inc., can be reached at rklass@2cy4u.com.

 1 Florida Hospital Association, Medicaid Financing Through Directed Payments & Provider Taxes