INSIDE THE ISSUE

> Shifting GIC Burden to Hospitals
> Senate Budget Proposal
> The Medicaid Debate in D.C.
> Hospital Week 2025
> Greenhouse Gasses
> Transition

MONDAY REPORT

GIC to Halt Payment for Care Today

The Group Insurance Commission, the quasi-independent state agency that provides insurance coverage to 460,000 individuals, has decided it will stop paying claims to providers beginning today.

Since at least February, the GIC has made it known at its public meetings that it is expending approximately $20 million monthly over and above what it had expected to pay and for which it had budgeted. It announced last December that it was over budget “every month” of the fiscal year.

But while the GIC has labeled the funding shortfall a “concern” since the beginning of the year, and the GIC has sought funding through a recently filed supplemental state budget, little else has been done to keep the GIC agency solvent past today.

As of today, the GIC has directed its contracted health plans to stop payment of healthcare claims for services provided to GIC members until it receives additional funds or until July 1, 2025. The GIC does not have any other contingency plan to handle the problem.

The disruption in GIC claims payments will undoubtedly result in serious financial consequences for the hospitals and health systems that are providing care to the commonwealth’s employees and retirees, and their dependents and survivors that are covered under the GIC umbrella.

MHA’s Executive Vice President and General Counsel Mike Sroczynski said, “Massachusetts hospitals and health systems are not in a financial position to assume the budget shortfalls of the GIC program. While we appreciate the financial situation of the GIC, this directive is an unacceptable contingency plan to those challenges. We implore the GIC to seek an immediate, alternative resolution to its budget deficiency that will not further exacerbate the financial condition of healthcare providers.”

As reported by the Center for Health Information and Analysis (CHIA), 55% of Massachusetts hospitals reported negative operating margins through December 31, 2024, meaning they took in less money than they spent to operate and provide care. Seventy-six percent (16 of 21) of reporting hospital health systems – which include affiliated physician practices – experienced negative operating margins during this period. Nine health systems have less than one month’s cash on hand. Safety net hospitals are in particularly fragile financial conditions.

Hospital and health systems’ concerns are growing, in significant part due to the costs associated with low-income uninsured and underinsured patients. The state’s Health Safety Net program is estimated to experience a funding shortfall exceeding $250 million in FY2025. Hospitals alone are responsible for covering that deficit.

Senate Releases $61.32 Billion Budget Proposal

Debate on the Massachusetts Senate’s proposed budget for Fiscal Year 2026 is expected to begin next Tuesday (May 20), and following that debate House and Senate conferees will meet in an effort to reach a compromise to send to Governor Maura Healey before the close of the current fiscal year on June 30.

The Senate proposal released by the chamber’s Ways & Means Committee last Wednesday totals $61.323 billion, which is a 6.3% increase over FY25 spending, but less than the 7.4% increase Governor Healey proposed in her H.1. budget plan. It’s also slightly less than the $61.5 billion budget the Massachusetts House passed on April 30.

Importantly, the House in its budget recognized the ever-increasing shortfalls in the Health Safety Net (HSN) fund and transferred $230 million from the Commonwealth Care Trust Fund (CCTF) to temporarily stabilize it. The Health Safety Net funding shortfalls are now anticipated to exceed $250 million in FY2025 and expected to grow further in FY2026. FY2024 concluded with a $198 million funding shortfall.

The Senate Ways & Means budget includes a starting point of “up to $15 million” to be transferred from the CCTF to support the Health Safety Net. MHA has prioritized a plan similar to what the House accomplished in its budget process. Amendment #482, filed for consideration during next week’s debate by Senator Barry Finegold (D–North Andover), would require the state to transfer $230 million dollars from the Commonwealth Care Trust fund to the Health Safety Net.

The CCTF states specifically that money may be transferred from it to the Health Safety Net Trust Fund to provide payments to acute hospitals and community health centers for reimbursable health services. The CCTF held more than $400 million at the end of FY2023, more than $500 million at the end of FY2024, and currently maintains a balance of more than $453 million in FY2025 — with additional revenues expected before the end of the fiscal year.

In another section, the proposed Senate budget allows not more than $25 million to be transferred from the Health Safety Net Trust Fund and Prescription Advantage programs to support the Medicare Savings Program expansions. Transfers up to this amount will further increase the Health Safety Net funding shortfall.

Among numerous other healthcare actions in the proposed budget, Ways & Means proposes providing $31 million to fund the operations of the Pappas Rehabilitation Hospital for Children for FY2026. While the governor’s budget had proposed closing Pappas and relocating those services, that plan is currently on hold. The Senate proposal instead requires DPH to submit a report to the legislature detailing the status of the Pappas Rehabilitation Hospital for Children by August 18, 2025, and monthly thereafter.

CBO, Warren Rap House Medicaid Proposals

Medicaid has been in the eye of the storm as Congressional GOP leaders try to find agreement on spending offsets for its budget reconciliation package. The House began committee action two weeks ago on various components of its budget reconciliation proposal, but a growing number of House Republicans have voiced concerns about the possible harm to their states from Medicaid proposals under discussion.

In a House Republican leadership meeting last week with the president, Donald Trump voiced concerns about Medicaid cuts and suggested they consider legislation to use international price index in Medicaid drug pricing as an offset. Reflecting these challenging deliberations, the House Energy and Commerce Committee delayed markup on its budget proposal until tomorrow, May 13 and Speaker Mike Johnson (R-La.) has since stated that proposals to reduce the Medicaid Federal Medical Assistance Percentage (FMAP) would not be included.

The arguments in favor of Medicaid offset proposals were further weakened this week when the Congressional Budget Office (CBO) wrote a letter in response to a request made by Senator Ron Wyden (D-Ore.) and Representative Frank Pallone (D-N.J.), the Ranking Members of the Senate Committee on Finance and the House Committee on Energy & Commerce, to examine how five Medicaid policy proposals would affect the federal deficit and Medicaid enrollment. The five proposals are said to be among those being considered for inclusion in Republicans’ budget reconciliation, which proponents argue are justified to address “waste, fraud, and abuse” in the Medicaid program.

Among the proposals are a reduced FMAP for the Medicaid expansion population and a limit on state provider taxes. According to CBO, an FMAP reduction for Medicaid expansion is expected to reduce the federal deficit by $710 billion while also eliminating Medicaid coverage for 5.5 million individuals and causing a 2.4 million increase in the number of uninsured individuals. CBO estimated that limiting state provider taxes will reduce the deficit by $668 billion while eliminating Medicaid coverage for 8.6 million enrollees and increasing the uninsured population by 3.9 million. Additionally, per capita caps on spending for all eligibility groups and the expansion population alone are expected to reduce the deficit by $682 billion and $225 billion, respectively, while reducing the Medicaid population by 5.8 million and 3.3 million and increasing the uninsured population by 2.9 million and 1.5 million, respectively. The fifth policy – repealing the Eligibility and Enrollment Final Rule issued by the Biden Administration in 2023 and 2024 – would reduce the deficit by $162 billion, reduce the Medicaid population by 2.3 million, and increase the uninsured population by 0.6 million.

Massachusetts Senate Elizabeth Warren (D) stepped into the fray last week when she sent a letter to Senate Majority Leader John Thune (R-S.D.) and House Speaker Johnson urging a rejection of the Medicaid proposals and suggesting that they look for savings instead with a “crack down on the growing threat to the Medicare program known as ‘upcoding’…the practice by which private insurers in Medicare Advantage (MA) exaggerate the medical diagnoses of their enrollees to secure higher payments from the federal government.” Senators Wyden, Bernie Sanders (D-Ver.), Tina Smith (D-Minn.), and Jeff Merkley (D-Ore.) joined the Warren letter. Representative Ayanna Pressley (D-Mass.) signed the House

National Hospital Week: A Commitment to Community

May 11 to 17 is National Hospital Week, a time to step back and consider the many ways in which hospitals are investing in community health, supporting the healthcare workforce, and building partnerships that reach underserved populations.

These initiatives reflect the vital role that MHA member hospitals and health systems play not just in saving lives, but in strengthening the overall wellbeing of the communities they serve.

Hospitals undertake these programs even as they face remarkably difficult financial challenges. Click here to read about more initiatives now underway in Massachusetts communities.

Below are a few examples submitted by MHA members.

Hospitals Doing Their Part to Reduce Greenhouse Gasses

MassHealth requires acute care hospitals to report greenhouse gas emissions and verify the report through partnership with a state–approved third party called a “validator.” The report includes data on onsite fuel combustion, purchased energy and electricity, anesthetic gas, and fleet vehicle gas and diesel consumption.

MHA, through its new Climate Sustainability Workgroup first convened over the summer, has been working with members and MassHealth to develop a framework for hospitals to report their data.

Last Tuesday, MassHealth issued Acute Inpatient Hospital Bulletin 202: Greenhouse Gas Emissions Reporting Requirements outlining the forms and data fields hospitals must use to submit their reports by the June 30, 2025 deadline.

Transition

Brandon Okezie is the new president and chief operating officer of Baystate Noble Hospital, effective immediately. Most recently, Okezie served as associate administrator at The George Washington University Hospital, a 385-bed, tertiary care, academic medical center in Washington, D.C., which includes a Level I Trauma Center and Level III Neonatal Intensive Care Unit. Prior to his tenure at GW, Okezie held several progressive leadership roles within Centura Health, notably serving as director of hospital operations at St. Anthony North Hospital in Westminster, Colorado. Okezie earned a Bachelor of Healthcare Administration from Texas State University and a Master of Health Administration from Cornell University.

John LoDico, Editor