HCA Holdings 2012 Annual Report Download - page 47

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. For example, we estimate that proposed changes to the distribution of Medicare DSH payments as a
result of the Health Reform Law will reduce Medicare DSH payments to our hospitals in the aggregate by
approximately $200 million in federal fiscal year 2014. 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.
Because most states must operate with balanced budgets and because 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 Program in many states. Some states that provide Medicaid supplemental payments are reviewing
these programs or have filed waiver requests with CMS to replace these programs, which could result in
Medicaid supplemental payments being reduced or eliminated. CMS approved a Medicaid waiver in December
2011 that allows Texas to continue receiving supplemental Medicaid reimbursement while expanding its
Medicaid managed care program. However, we cannot predict whether the Texas private supplemental Medicaid
Waiver Program will continue or guarantee that revenues recognized from the program will not decrease.
The Health Reform Law made changes to the Medicaid program and will likely cause additional changes in
the future. For example, the Health Reform Law provides for material reductions to Medicaid DSH funding. The
Health Reform Law will result in increased state legislative and regulatory changes in order for states to comply
with new federal mandates, such as the requirement to establish or participate in Exchanges and to participate in
grants and other incentive opportunities. The Health Reform Law requires states to at least maintain the Medicaid
eligibility standards in effect prior to the enactment of the law for adults until January 1, 2014 and for children
until October 1, 2019. However, states with budget deficits may seek a waiver from this requirement to address
eligibility standards that apply to adults making more than 133% of the federal poverty level. The Health Reform
Law also provides for significant expansions to the Medicaid program beginning in 2014. However, in its
June 28, 2012 ruling, the United States Supreme Court struck down the portion of the Health Reform Law that
would have allowed HHS to penalize states that do not implement the Medicaid expansion provisions with the
loss of existing federal Medicaid funding. Thus, states may opt not to implement the expansion.
In some cases, commercial third-party payers rely on all or portions of Medicare payment systems to
determine payment rates. Changes to government health care programs that reduce payments under these
programs may negatively impact payments from commercial third-party payers.
Current or future health care reform and deficit reduction efforts, changes in laws or regulations regarding
government health care programs, other changes in the administration of government health care programs and
changes to commercial third-party payers in response to health care reform and other changes to government
health care programs could have a material, adverse effect on our financial position and results of operations.
We are unable to predict the impact of the Health Reform Law, which represents a significant change to the
health care industry.
As enacted, the Health Reform Law will change how health care services are covered, delivered, and
reimbursed through expanded coverage of uninsured individuals, reduced growth in Medicare program spending,
reductions in Medicare and Medicaid DSH payments and the establishment of programs where reimbursement is
tied to quality and integration. In addition, the law reforms certain aspects of health insurance, expands existing
efforts to tie Medicare and Medicaid payments to performance and quality, and contains provisions intended to
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