What we know (and don’t know) about potential Medicaid cuts

Many in our community are feeling the shockwaves of the proposed cuts to Medicaid. How will health centers — vital resources that serve vulnerable populations and already operate with limited budgets — continue to deliver critical care to their communities? While we don’t have all the answers, we know that navigating through this moment will take all of us coming together to support each other and share knowledge.

That’s why Yuvo Health recently invited our community to share their questions and have a discussion about the impact these proposed healthcare budget cuts will have on health centers. You can watch the full video here:

Below is an edited excerpt from our conversation covering key points about what we know about the cuts so far, and how health centers can prepare. 

Cesar Herrera is the co-founder and CEO of Yuvo Health.
David Gross is a consultant with Sachs Policy Group. 

Cesar Herrera: I'm excited to have this conversation, but before that, I want to introduce myself. I'm the co-founder and CEO of Yuvo Health. Yuvo Health helps community health centers — and only community health centers — create a competitive advantage and get access to meaningful, sustainable revenue streams through value-based care. Essentially, it’s about giving them credit for the amazing work that health centers do every day that is not directly reimbursable in many cases by Medicaid, Medicare, or other insurances.

David Gross: I'm David Gross. I am a consultant with Sachs Policy Group. We're based in New York. We help lots of New York healthcare entities, including a lot of FQHCs (federally qualified health centers), navigate the system. Before I was here, I worked at a FQHC called Community Healthcare Network as their general counsel.

What do we know about potential Medicaid cuts so far?

Cesar Herrera: There was the initial conversation and initial proposal for potentially up to $880 billion in federal spending cuts over 10 years with Medicaid, Medicare and CHIP on the line. But most likely, it's going to hit Medicaid more so than others. So what's definite right now?

David Gross: What's definite is that there's going to be a mighty effort to pass a reconciliation bill over the next few months that we're all going to pay a lot of attention to. But I feel like the theme for today is going to be how little we know. For example, you've got the Republicans that originally had a very aggressive target savings — that's the $880 billion. 

You then have a bunch of Republicans [recently] saying, “Actually, we don't want to make cuts that impact vulnerable populations.” But they don't really define who that is. Then, you have senate Republicans who haven't really tried to make significant cuts and just plan on paying for things by working on the budget side. So the answer is that it's not really clear yet how this will pay out from a federal level. 

Which states will automatically cut Medicaid if services are cut at the federal level? 

David Gross: When they passed the Medicaid expansion, there were a number of states that said if the match should ever change — for example, if it were to get cut or reduced — then all of those people who were covered would immediately drop off their roles. My memory of it is that it was pretty much only red states that were doing that. It was more of a politically palatable way to do that and protected the state financially. 

Cesar Herrera: My recollection as well is that they are majority red states. I hate to use that terminology, but that they are majority red states that had that trigger clause in place. There are also certain states — that were also red states — that didn't opt into Medicaid expansion whatsoever. So in those situations, they've already cut what they wanted to cut. So the impact is relatively nominal because they already cut pretty deeply prior.

Editor’s note: Federal funding cuts may trigger automatic loss of health coverage in the following states: Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah, Virginia, and Arizona.

David Gross: Assuming that the impact is focused on the expansion population, you can still find ways to cut even further depending on how big the cuts are. 

What other programs are being cut?

Cesar Herrera: Let's dig into the other programs that we do know, even though they're smaller in nature. What we've seen so far is there are some smaller announcements that were made in regards to very specific cuts, such as the Medicare Shared Savings Program cuts. 

There are other federal funding cuts for demonstration programs that are happening at the state level that primarily affect preventive care services, primary care services, or home and community-based services. There seemed to be a big contrast between those cuts that are being made and the new CMS administrators’ ongoing speeches. He was brought on board around creating a more focus on primary preventive care with even more focus on nutrition. Considering that it contradicts each other a bit, what do you think we should read into these recent actions?

David Gross: So CMMI (The Center for Medicare and Medicaid Innovation) is a great example. They cut a bunch of programs. But there was a recent report that looked at some of the programs and pointed out how many of them are losing money. Politically, CMMI has been long criticized by Republicans for just not doing its job in terms of finding new programs that work and save the government money.  

I think there's a lot of currents and ideologies around different programs that are all going to play out over time. I don't feel like, in the healthcare space, you have a single vision or single voice that really is able to put forth its vision on the system — everything's going to be piecemeal.

As you ask the question, I think about what’s happening on the EPA side of things. They’re rolling back all these regulations, and yet, you can pick up any podcast and listen to the folks who support Kennedy talking about all the terrible things in our bloodstream because of toxins. There’s this incongruity of what people are saying they want to happen and how they're getting there. We’re seeing it on the healthcare side, too.

How can health centers prepare for what might happen?

David Gross: When we talk about how to prepare, there are some important things to ask yourself, including:
‍

“What are the types of things that will help keep us insulated from what's going on?”

An example might be trying to be more efficient with how you provide care. That's going to be a fundamental component that you can always work on. It'll always save you money. ‍

“What can we focus our attention on now while the chaos of what happens with the federal government plays out?”

‍For example, there’s value-based payments, which is related to your work at Yuvo. Even if the pressure goes down at a federal level, the concept of VBP — whether it be in Medicare or Medicaid — will be pretty continuous. ‍

“What is happening at the state level?”

Everyone should be paying attention to your states. States are going to have very different approaches to what they will do if there are Medicaid cuts. For example, in New York, there are no snapback provisions — so if the feds make cuts, it's not like New York immediately pulls back Medicaid. Also, from a budget standpoint, New York has a decent rainy day surplus. That’s not to say there's not going to be an impact. But it makes it feel like New York has ways to buffer some kind of federal cuts. 

One way to think about it is: how has the Medicaid dynamic been in each state? If some sort of federal cuts come out, how will your legislature and your executive at the state level respond to it?

“What is happening with Medicare?”

I know a lot of FQHCs have worked in the past really hard to build their Medicaid patient pool, which is challenging because when people get access to Medicare, a lot of times they look for a different practice that can see them. 

What I think is striking is that there's obviously a lot of political support from Medicare. There's a ton of political support in this administration for Medicare Advantage. This is going to depend on where you are, but the number of people on Medicare is going to keep growing.

So that's a place where you've got political support, you've got more money going in, and you have more people becoming eligible. It’s a really interesting focus area as people look to diversify and figure out what to do to balance their Medicaid revenue.

Conclusion 

While there’s still a lot of uncertainty about what’s happening federally, there are actions FQHCs can take to prepare. This includes understanding the legislation at the state level, increasing efficiency in your own practice, and looking into alternative revenue streams like value-based care. We’ll continue to share more insights from the open forum in future blog posts, including additional actionable steps FQHCs can take to prepare, and a deeper dive into the value-based care landscape. 

Yuvo Health can help 

Now is the time to start building momentum toward VBC. FQHCs that recognize this transitional moment and adapt to it will be better positioned to achieve their goals and continue to support their communities with exceptional and sustainable care.

As both an MSO and an IPA, Yuvo Health has experience leading other community health centers through these changes. 

As Dr. Rita Bilello, CEO of at Metro Community Health Centers, put it:

“With Yuvo taking this challenge on and eliminating the barriers, it gives FQHCs a voice in the conversation but also allows us, to some degree, to prove what we’re capable of doing.” 

In particular, we can help your team:

• Enter into higher quality VBC contracts with extensive bargaining power
• Gain access to revenue where Yuvo Health assumes the downside risk
• Overcome common hurdles with technology, including data collection, processing, and analytics
• Organize care coordination, patient outreach, planning, and engagement
• Make data-driven decisions that result in increased quality of care and revenue

You can learn more about us here or schedule a meeting today.