How hospitals can financially prepare for an adverse decision in King v. Burwell

The U.S. Supreme Court has the healthcare sector on pins and needles regarding its decision in the King v. Burwell case, which could strip tax credit subsidies from millions of Americans.

That could place hospitals in a precarious financial position, as the number of uninsured people in states that rely on the federal exchange could spike. As a result, the Healthcare Financial Management Association (HFMA) has offered advice to hospitals on how to handle an adverse decision.

"A decision to limit eligibility for subsidies will affect both revenue cycle and financial operations of provider organizations. Specific impacts that will need to be managed are those that affect charity care and bad debt policies," the HFMA said in a June 10 statement.

A recent study by the Urban Institute found 8.2 million Americans would lose their healthcare coverage as the result of an adverse ruling. That would include 445,000 enrollees in the Children's Health Insurance Program and another 300,000 with employer-based coverage. Major hospital lobbies such as the American Hospital Association and the Federation of American Hospital systems have urged the Supreme Court to keep the subsidies in place.

Among the pointers provided by the HFMA in a set of FAQs:

  • Identify and provide resources for patients if their insurer decides to leave the exchange
  • Clarify what financial assistance is available for patients who might lose coverage during treatment
  • Make rapid determinations of alternate insurance options and financial assistance eligibility
  • Provide pricing information for the care they receive
  • Evaluate the impact on charity care and bad debt reserve calculations

"Given the uncertainty about the court's decision, these are the kinds of steps that make good financial sense as well as good sense to help your patients in understanding their own financial obligations," Rick Gundling, HFMA's vice president of healthcare financial practices, said in the statement.

To learn more:
- read the HFMA statement
- check out the FAQs

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