HCA Holdings 2011 Annual Report Download - page 45

health savings accounts, that shift greater responsibility for care to individuals through greater exclusions and
copayment and deductible amounts. Prior to the Health Reform Law being fully implemented, our facilities may
experience growth in bad debts, uninsured discounts and charity care as a result of a number of factors, including
the economic downturn and continued high unemployment. The Health Reform Law seeks to decrease, over
time, the number of uninsured individuals through reforms that mostly will become effective January 1, 2014,
provided the law is not found to be unconstitutional or otherwise revised. Even after full implementation of the
Health Reform Law, we may continue to experience bad debts and have to provide uninsured discounts and
charity care for undocumented aliens who are not permitted to enroll in a health insurance exchange or
government health care programs and certain others who may not have insurance coverage. Further,
implementation of the Health Reform Law could result in some patients terminating their current insurance plans
in favor of lower cost Medicaid plans or other insurance coverage with lower reimbursement levels. Patient
responsibility accounts may continue to increase even with expanded health plan coverage as a result of increases
in plan exclusions and deductibles and copayment amounts.
It is difficult to predict the full impact of the Health Reform Law due to the law’s complexity, lack of
implementing regulations or interpretive guidance, gradual and potentially delayed implementation, pending
court challenges and possible amendment or repeal, as well as our inability to foresee how individuals and
businesses will respond to the choices afforded them by the law.
Changes in government health care programs may adversely affect our revenues.
A significant portion of our patient volume is derived from government health care programs, principally
Medicare and Medicaid. Specifically, we derived 44.5% of our revenues from the Medicare and Medicaid
programs in 2011. Changes in government health care programs may reduce the reimbursement we receive and
could adversely affect our business and results of operations.
In recent years, legislative and regulatory changes have resulted in limitations on and, in some cases,
reductions in levels of payments to health care providers for certain services under the Medicare program. The
Budget Control Act of 2011 (the “BCA”) provides for new spending on program integrity initiatives intended
to reduce fraud and abuse under the Medicare program. Further, pursuant to the BCA, a bipartisan joint
congressional committee was created to identify additional deficit reductions. Because the committee failed to
propose a plan to cut the deficit by an additional $1.2 trillion by the November 23, 2011, deadline, the BCA
requires automatic spending reductions of $1.2 trillion for federal fiscal years 2013 through 2021, minus any
deficit reductions enacted by Congress and debt service costs. However, the percentage reduction for Medicare
may not be more than 2% for a fiscal year, with a uniform percentage reduction across all Medicare programs.
We are unable to predict how these spending reductions will be structured, what other deficit reduction
initiatives may be proposed by Congress or whether Congress will attempt to suspend or restructure the
automatic budget cuts.
These reductions will be in addition to reductions mandated by the Health Reform Law, which provides for
material reductions in the growth of Medicare program spending, including reductions in Medicare market basket
updates and Medicare DSH funding. Further, from time to time, CMS revises the reimbursement systems used to
reimburse health care providers, including changes to the MS-DRG system and other payment systems, which
may result in reduced Medicare payments.
Since most states must operate with balanced budgets and since the Medicaid program is often a state’s
largest program, some states have enacted or may consider enacting legislation designed to reduce their Medicaid
expenditures. Further, many states have also adopted, or are considering, legislation designed to reduce coverage,
enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance
or expand the states’ Medicaid systems. The current economic environment has increased the budgetary
pressures on many states, and these budgetary pressures have resulted, and likely will continue to result, in
decreased spending, or decreased spending growth, for Medicaid programs and the Children’s Health Insurance
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