HCA Holdings 2011 Annual Report Download - page 36

• whether the net effect of the Health Reform Law, including the prohibition on excluding individuals
based on pre-existing conditions, the requirement to keep medical costs at or above a specified
minimum percentage of premium revenue, other health insurance reforms and the annual fee applied to
all health insurers, will be to put pressure on the bottom line of health insurers, which in turn might
cause them to seek to reduce payments to hospitals with respect to both newly insured individuals and
their existing business; and
• the possibility that implementation of the provisions expanding health insurance coverage or the entire
Health Reform Law will be delayed due to court challenges or revised or eliminated as a result of court
challenges and efforts to repeal or amend the law. Numerous lawsuits have challenged the
constitutionality of the Health Reform Law. Some federal courts have upheld the constitutionality of
the Health Reform Law or dismissed cases on procedural grounds. Others have held unconstitutional
the requirement that individuals maintain health insurance or pay a penalty and have either found the
Health Reform Law void in its entirety or left the remainder of the law intact. The U.S. Supreme Court
is expected to decide the constitutionality of the Health Reform Law in 2012. In addition, repeal of the
Health Reform Law has become a theme in political campaigns during this election year.
On the other hand, the Health Reform Law provides for significant reductions in the growth of Medicare
spending, reductions in Medicare and Medicaid DSH payments and the establishment of programs where
reimbursement is tied to quality and integration. Since 44.5% of our revenues in 2011 were from Medicare and
Medicaid, reductions to these programs may significantly impact the Company and could offset any positive
effects of the Health Reform Law. It is difficult to predict the size of the revenue reductions to Medicare and
Medicaid spending, because of uncertainty regarding a number of material factors, including the following:
• the amount of overall revenues the Company will generate from Medicare and Medicaid business when
the reductions are implemented;
• whether reductions required by the Health Reform Law will be changed by statute or by judicial
decision prior to becoming effective;
• the size of the Health Reform Law’s annual productivity adjustment to the market basket;
• the amount of the Medicare DSH reductions that will be made, commencing in federal fiscal year 2014;
• the allocation to our hospitals of the Medicaid DSH reductions, commencing in federal fiscal year 2014;
• what the losses in revenues will be, if any, from the Health Reform Law’s quality initiatives;
• how successful ACOs will be at coordinating care and reducing costs or whether they will decrease
reimbursement;
• the scope and nature of potential changes to Medicare reimbursement methods, such as an emphasis on
bundling payments or coordination of care programs;
• whether the Company’s revenues from upper payment limit (“UPL”) programs, or other Medicaid
supplemental programs developed through a federally approved waiver program (“Waiver Program”),
will be adversely affected because there may be reductions in available state and local government
funding for the programs; and
• reductions to Medicare payments CMS may impose for “excessive readmissions.”
Because of the many variables involved, we are unable to predict the net effect on the Company of the
expected increases in insured individuals using our facilities, reductions in Medicare spending, reductions in
Medicare and Medicaid DSH funding, and numerous other provisions in the Health Reform Law that may affect
the Company. Further, it is unclear how efforts to repeal or revise the Health Reform Law and federal lawsuits
challenging its constitutionality will be resolved or what the impact would be of any resulting changes to the law.
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