Unexpected delays in billions of dollars of supplemental Medicaid payments have forced some hospitals across the country to cut costs including laying off staff and pausing payments to medical suppliers.
Hospital associations in at least 10 states said the Centers for Medicare and Medicaid Services, the federal agency responsible for approving funds known as state-directed payments, has been unusually slow at processing applications for them. Some of the delays date to the fall of 2024.
“There are tens of millions of dollars a month not coming to hospitals. They are depleting their cash reserves,” said Hilton Raethel, CEO of the Healthcare Association of Hawaii, which represents all 28 hospitals in the state. Hawaii’s 19 private hospitals are awaiting about $240 million in funds, which they had expected at the beginning of the year, Raethel said.
CMS didn’t approve any applications for state-directed payment programs between Jan. 17 and late February, according to its website. It has since approved a handful of applications. Hospitals still waiting for a decision from CMS said the recent approvals give them hope that funds will start flowing again.
The emergency entrance to Tucson Medical Center, part of the TMC Health system, in Tucson, Ariz. PHOTO: CHENEY ORR/BLOOMBERG NEWS
CMS said it has seen a substantial increase in the volume of applications for the payment programs. It has received “more than 150 since late 2024 compared to just four in entire years past,” a spokesperson said.
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