This article appears in the August 2012 issue of HealthLeaders magazine.
Editor's note: This piece is adapted from Karen Minich-Pourshadi's July 2 column "Medicaid Ruling Creates Major Budgeting Problem." To see this and other columns, visit the Finance pillar Archive.
The U.S. Supreme Court's two-step—affirming the constitutionality of the Patient Protection and Affordable Care Act while striking down expanded Medicaid coverage—puts CFOs in a budget planning pickle.
They won't know who their payers are until online insurance exchanges are established, or how many people will be on plans, or how their charity care and bad debt will be influenced. It's hard to create a long-term strategic plan when you can't project revenue with any kind of accuracy even two years out.
When the court ruled that the federal government may not monetarily punish states that refuse to expand Medicaid eligibility, it took the teeth out of the legislation, says Michael Freed, executive vice president and CFO at Spectrum Health, a nine-hospital system in western Michigan with nearly 9,000 beds, and president and CEO of Priority Health, the system's health plan with more than 600,000 covered lives.