Molly Gamble on Medicaid Cuts, Hospital Strain and What’s Ahead for 2025

Summary

Becker’s Healthcare Podcast: Detailed Summary of "Molly Gamble on Medicaid Cuts, Hospital Strain and What’s Ahead for 2025"

Introduction In the July 8, 2025 episode of Becker’s Healthcare Podcast, host Chanel Bunger engages in an insightful discussion with Molly Gamble, Vice President of Editorial at Becker's Healthcare. The conversation centers on recent legislative changes affecting Medicaid, the resultant strain on hospitals and health systems, and projections for the healthcare landscape leading into 2025.

Legislation Impacting Medicaid Funding Molly Gamble begins by outlining the significant legislative developments that have recently passed both the Senate and the House. Specifically, she highlights a substantial bill that passed the Senate with a 51-50 vote on July 1st and subsequently moved through the House on July 3rd. Gamble emphasizes the bill’s potential challenges for hospitals and health systems nationwide, primarily focusing on the federal Medicaid spending reductions.

“Within this bill, it's projected by the CBO, the latest projections show it reducing federal Medicaid spending by $1 trillion over about 10 years, leaving about 12 million people without Medicaid coverage.” ([02:15])

Mechanisms of Medicaid Funding Reduction The centerpiece of the bill is the mandate requiring adults eligible for Medicaid through the ACA expansion to meet work and reporting requirements. Additionally, the legislation repeals the Biden administration's rule aimed at simplifying Medicaid eligibility and renewal processes. Gamble explains that while the bill doesn't directly cut funds, it imposes significant administrative barriers, making Medicaid more difficult to access.

“It's really policy by paperwork in a way. It's not cutting the funds directly, but making them more difficult to access.” ([03:10])

Real-World Implications for Health Systems Gamble delves into the tangible effects of these legislative changes, drawing from recent conversations with CEOs and CFOs in the healthcare sector. She discusses the anticipated increase in Medicaid churn, where patients frequently move in and out of Medicaid eligibility, placing additional administrative burdens on health systems.

A CFO from a nonprofit health system mentioned, “It’s going to be a matter of maintenance. Do health systems have the infrastructure that really help people stay enrolled?” ([04:05])

Furthermore, Gamble cites a CFO from a Minnesota health system facing a state budget deficit. The CFO highlighted the complexities introduced by the new regulatory environment post-ACA, particularly regarding billing and collection practices that are now more restricted.

“It's not going to look like it did pre ACA because back then we could actually try to collect this money, whereas we'll be very limited in our ability to collect from a lot of these patients because of the new rules that have been put in by the state.” ([05:20])

HHS and Private Insurers’ Initiatives on Prior Authorizations Shifting focus, Gamble discusses a recent collaboration between the Department of Health and Human Services (HHS) and private insurers aiming to reduce prior authorization requirements. Approximately 50 health insurers have pledged to simplify these processes across commercial Medicare Advantage and managed Medicaid plans, targeting real-time approvals for most requests by 2027.

While this initiative is promising, Gamble notes a sense of cautious optimism among hospital executives. Chris Van Gord, CEO of Scripps Health, expressed skepticism about the impact of these changes.

“It's a very minor improvement which is long overdue. I don't believe that it will substantially decrease denials, but might just speed up the denial process.” ([06:10])

Anticipated Strain on Hospitals and Health Systems Gamble anticipates that the passage of the Medicaid cuts will lead to increased layoffs within health systems, having already seen workforce reductions attributed to federal funding changes. Rural hospitals are particularly vulnerable, with over half of the states projected to experience Medicaid funding reductions exceeding 20%. Data from the Cecil G. Sheps Center for Health Services Research at UNC Chapel Hill estimates that these cuts could threaten the closure of approximately 340 financially struggling rural hospitals.

“We are probably going to be due for an interesting rest of 2025 based on what has happened this week.” ([06:50])

Advocacy Efforts and Future Outlook Despite vigorous advocacy by hospital executives at various governmental levels to prevent these Medicaid cuts, the legislation has passed, indicating that these efforts did not yield the desired outcome. Gamble underscores the ongoing monitoring of hospital closures and workforce reductions as the situation unfolds.

Conclusion Molly Gamble concludes by reaffirming the uncertainty surrounding the full impact of the Medicaid cuts and the health system's responses in the short, medium, and long term. The episode sheds light on the intricate challenges facing the U.S. healthcare system, particularly in relation to Medicaid funding and hospital sustainability.

Key Takeaways:

• A significant bill reducing federal Medicaid spending by $1 trillion over a decade has passed both the Senate and the House.
• The legislation imposes work and reporting requirements for Medicaid eligibility and repeals simplification rules, increasing administrative barriers.
• Health systems face heightened challenges with Medicaid churn, requiring robust infrastructure to manage patient enrollments.
• Initiatives to reduce prior authorizations are underway but may offer only marginal improvements in the short term.
• Rural hospitals are at heightened risk of closure due to substantial Medicaid funding cuts.
• Ongoing advocacy by health system leaders has yet to halt the passage of the Medicaid reduction bill.

This episode provides a comprehensive overview of the legislative changes affecting Medicaid, their implications for hospitals and health systems, and the broader outlook for the healthcare industry as we approach 2025.

Transcript

[A]

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[B]

Hello and welcome to the Becker's Healthcare Podcast. My name is Chanel Bunger. Today I'm excited to speak with Molly Gamble, Vice President of Editorial at Becker's Healthcare, who joins us weekly to share insights in a healthcare trend she's keeping an eye on. Molly, thank you as always for joining me today. Why don't you take it away and tell us about some of the things that you're seeing out there.

[C]

Yeah. Thank you so much, Chanel. We are meeting it's been a big week for healthcare leaders given what has passed through the Senate and just now recently the House with this big beautiful bill. So we saw this legislation pass the senate with a 5150 vote on July 1st. Today's July 3rd, it just passed the House. Now it moves to Trump. And so many things in this bill stand to be really challenging for hospitals and health systems across the country, the largest being the federal Medicaid spending reductions that are outlined in this legislation. So I wanted to talk about a few things in the bill and then some of the real world implications for it, based on conversations I've had with CEOs and CFOs recently. Within this bill, it's projected by the CBO, the latest projections show it reducing federal Medicaid spending by $1 trillion over about 10 years, leaving about 12 million people without Medicaid coverage. And one of the main levers linked to about nearly 500 billion in reduced Medicaid spending is a mandate for adults eligible for Medicaid through the ACA expansion to meet work and reporting requirements. It also repeals the Biden administration's rule to simplify Medicaid eligibility and renewal processes. So this is really policy by paperwork in a way. It's not cutting the funds directly, but making them more difficult to access. And it's going to place some big strain on health systems beyond just the reimbursement reductions that health systems anticipate. They're also going to see a lot more churn with Medicaid use. That's far different from what they've seen today. As one CFO at a nonprofit system told me in the past couple of weeks, the system he feels the organization has the infrastructure to help people get enrolled, but now it's going to be a matter of maintenance. Do health systems have the infrastructure that really help people stay enrolled? Do health systems have abilities to know when people have dropped off Medicaid so they can treat them appropriately when they show up and not just assume they're still eligible? And to make sure that there's visibility and information given how much things are set to churn so administratively looking at a huge challenge. I also recently spoke with the CFO of a health system in Minnesota. This is a state that's seen its budget outlook flip from a record surplus to a projected 6 billion deficit for the 2829 cycle. And in light of this shift, this health system has been doing a lot of scenario planning all the way back to pre Affordable Care act days. And the CFO had a really good distinction saying that, you know, it's not as simple as hitting rewind and going back to the collection methods that might have served us then. The regulatory environment since has changed. There's some of those more aggressive billing and collection practices might have been routine before the ACA are now restricted or outright prohibited. So it complicates the situation. As the CFO put it, it's not going to look like it did pre ACA because back then we could actually try to collect this money, whereas we'll be very limited in our ability to collect from a lot of these patients because of the new rules that have been put in by the state, end quote. In addition to what we saw with the legislation passed, we did see HHS band together with private insurers a couple weeks ago for some big promises on prior AUTH reduct. This stands to be a meaningful improvement, but I think there is some cautious optimism among people in hospitals and health system C suites. In this announcement, about 50 health insurers pledged to simplify prior AUTH processes across their commercial Medicare Advantage and managed Medicaid plans, looking to reduce the volume of prior authorizations and provide more real time approvals for most requests by 2027. And as much as health system executives might be eager to see this as relief as a welcome development compared to some of the that they're seeing in other pockets of the government right now, we have reported that most leaders are a little wary of lip service. So they're eager for some meaningful action on this issue and not more promises. Chris Van Gord, the CEO of Scripps Health, told our Alan Condon he thinks this move is a step in the right direction, but, quote, it's a very minor improvement which is long overdue. I don't believe that it will substantially decrease denials, but might just speed up the denial process, end quote. So more to be seen there and then I think, Chanel, you know, we reported on this bill being passed through the Senate and the House today, moving to the president. But much still remains to be seen about how health systems will respond through the end of the year to this bill. In the near term, we do anticipate seeing layoffs tick up. We've already seen systems in the last two weeks make workforce reductions and attribute them to federal funding changes from MC small hospitals. AMC is also having the burden of those NIH cuts. The rural hospital piece is really concerning. You know, in more than half of states, reductions in Medicaid funding for rural hospitals would exceed 20%. And we have had some data from the Cecil G. Shoppe center for Health Services Research at UNC at Chapel Hill put an estimate that these cuts to Medicaid and legislation could place about 340 financially struggling rural hospitals at even heightened risk of closure. So we remain to see what comes of this. We continue to report on hospital closures quite regularly. I think there were at least two to three just this week alone. And then those workforce reductions, we'll continue to monitor and report as those are announced or made. But we are probably going to be due for an interesting rest of 2025 based on what has happened this week. And this has been a long time coming. Hospital executives have been working really hard and advocating with their local, state level and federal lawmakers to really champion Medicaid and ensure that these cuts do not pass through. It seems as though their advocacy efforts, despite the amount of energy put into them, did not achieve the outcome I think health systems would have wanted to see here. So we remain with our ear to the ground, Chanel, not only with what's in this bill, but how health systems will respond to it in the near mid and long term.

[B]

Absolutely. Well, Molly, I'm looking forward to you keeping us updated on all of this as it unfolds. And I want to thank you as always for sharing your insights on the Becker's Healthcare podcast. Thank you.

[C]

Thank you so much, Chanel.