Medicaid cuts are coming: Here’s how health care leaders can lessen the blow

We’ve always known the risk of a new administration could mean Medicaid funding heads straight for the chopping block, and now it actually is. It’s an unsettling reality for the health care industry that’s leaving millions of Americans and thousands of executives anxiously awaiting the final ruling and sticky aftermath to follow. Although there’s a lot of uncertainty on how to navigate potential changes, there’s one thing we know for sure: Hope is not a viable strategy. Now, Medicaid plan leaders have the ability, and the responsibility, to do everything in their power to preserve care, and they must act immediately.

House Republicans successfully passed a budget blueprint that indicates significant cuts to the program, which is currently begin deliberated on by the Senate. Real reductions are very likely on the way. If adopted, we could see everything from per capita caps that limit federal contributions and put extra strain on states, to stricter eligibility requirements and work mandates that could take coverage away from millions of Americans. Physicians have already seen a 2.83% pay cut this year on Medicare services they provide – and even lower rates of reimbursement paired with higher rates of uninsured individuals would harshly impact all states, doctors and other clinicians, hospitals, plans, and patients.

On one hand, stripping away coverage means worsened health disparities, financial burdens and poor health outcomes among America’s most vulnerable communities, and on the other, reduced funding could destabilize providers and facilities who may have no choice but to reduce service, lay off staff or close doors completely.

It might be out of the industry’s hands to prevent these legislative changes from happening, but it’s prudent for health care executives to navigate them as strategically as possible — especially Medicaid plan leaders who can help lessen the blow to members and subsequently physicians, other providers and health care facilities as well.

What plans need to do now

As a former Medicaid chief financial officer, I’ve had my fair share of navigating slim budgets and I have been doing a lot of thinking on how plans can prepare for any changes coming to Medicare/Medicaid/Marketplace. Fortunately, we don’t need to know exactly what’s going to happen to take immediate action. In fact, we shouldn’t wait. Plans should make fundamental changes to maximize care and quality with fewer resources. Here’s how they can start:

1. Deeply understand members and their needs. Plans must be able to provide care that’s effective from the start, and the first step in doing so is understanding members’ unique needs as comprehensively as possible. Now is the time to gather data on member needs — medical, behavioral, prescription drug, social drivers/determinants of health (SDoH) and social needs — I mean everything. It’s going beyond acknowledging that a certain ZIP code has a higher number of readmits; it’s using these insights to identify the underlying reason and design support programs to make sure it doesn’t happen in the first place. With a complete 360-degree view, plans can more responsibly and efficiently allocate resources to the right places.
2. Know your capacity inside and out. This goes far beyond internal capacity. Plans must assess the full ecosystem of their social needs programs and community-based organization partnerships. To ensure every last resource is utilized efficiently, ask yourself: Where are your food pantries? How broad is your volunteer transport program? When you find holes, either rebuild old relationships or create new ones to fill the gaps. This helps reduce the reliance on federal support and creates a more resilient and sustainable support network for members. Know what you are lacking, and focus on what you can do while you work to fill those gaps.
3. Given your capacity, match members to what they actually need. Once these insights are gathered, members can receive targeted support that’s effective from the very start. For Medicaid plans, this can only be done by having a deep understanding of SDoH, which heavily influence access to care, adherence rates and overall ability to actually benefit from the care they receive. Leveraging automation can allow plans to create advanced segments from SDoH data based on unique member risks — and when resources are tight, it’s critical to connect the right member with the exact support they need most.
4. Identify funding alternatives. With reduced federal assistance, plans need to begin looking for sustainable alternatives to supplement, such as philanthropic grants, pooled community resources and public-private partnerships. Health care groups each addressing a common challenge can work together to braid their funding — whether from the state, county, donations or health plan investments – and maximize their reach. Leveraging community resources in this way can help lessen the complete reliance on state budgets and shrinking U.S. Centers for Medicare & Medicaid Services to fill gaps in care and continue offering support to address SDoH as well.
5. Ongoing advocacy. It might seem like policy changes are out of our hands, but advocacy can go a long way, as legislators are more receptive to health care professionals than we think. We must continue leveraging this influence to foster dialogue among policy makers, health care executives and community advocates and craft comprehensive advocacy strategies aimed at safeguarding the future of social support programs. One powerful method is using statistics and data. Plans and physicians providing legislators with district-specific insights showing exactly how many of their constituents would be affected by particular policy changes can facilitate actionable changes.

The bottom line

While the changes potentially coming to Medicaid are likely going to be significant, they don’t have to be devastating. We just have to be ready for if and when they’re implemented, which means acting now.

Regardless of what happens, plans should always — and in many cases already do — prioritize targeted interventions based on both clinical and social factors, leverage predictive analytics to spot high-risk members months before crisis, and continue building impactful partnerships with community organizations that extend their reach.

Not only do millions of Americans rely on the success of Medicaid programs, but health care providers, facilities and the entire industry do as well. With adequate preparation, plans with tighter budgets and even fewer resources can allocate them as strategically as possible to maintain payment stability and quality care. At the end of the day, it’s not about doing more with less, it’s about doing better with what we have.

Trey Sutten, MBA, is the CEO of Siftwell and has more than two decades of experience at the intersection of for-profit and mission-focused organizations to advance and transform health care, education and housing. He was formerly the CEO of a large managed care organization as well as CFO for the North Carolina state Medicaid program.