Hospitals and health systems are getting some financial relief and operational predictability, thanks to a bipartisan health care spending bill signed by President Trump earlier this week.
The legislation does three important things.
First, it eliminates cuts to Medicaid (Medi-Cal) disproportionate share hospitals through Oct. 1, 2027 (the start of federal fiscal year 2028). Had these cuts gone into effect, California’s safety-net hospitals would have lost more than $1 billion annually. These resources are a lifeline for many of the 44% of hospitals statewide that lose money every day caring for patients.
Second, the law includes a two-year extension of rules first permitted during the COVID-19 pandemic that dramatically expands remote, telehealth services, and provides a five-year extension for acute hospital-at-home coverage under Medicare. Together, these programs provide efficient, effective ways for hospitals with finite resources to care for patients and a convenient option for patients who are able to receive care remotely.
Finally, the legislation protects some vulnerable rural hospitals by extending increased inpatient payment adjustments for low-volume hospitals through Sept. 30, 2027. For a handful of hospitals on the financial edge, this will bring nearly $17 million annually in support.
CHA has been working closely with members of California’s congressional delegation — on both sides of the aisle — to reinforce the importance of these programs to protect vital hospital services, and the legislation includes a couple of technical California-specific provisions that address lingering issues for a small handful of hospitals.
Work remains to make these changes permanent, and there are other key federal issues — site-neutral cuts are still in play for future budget negotiations — but these provisions are in line with changes CHA has been pushing for and provide meaningful relief amid the many headwinds facing California hospitals.
