Illinois hospitals face $4 billion revenue loss due to new federal Medicaid rules

1, will lower the cap on state directed payments for hospitals. Currently, these supplemental reimbursement rates allow states to pay higher rates to specific facilities to keep them financially viable. Under the new law, states that expanded Medicaid under the Affordable Care Act will see these caps lowered to 100% of the Medicare rate, starting in 2028. David Gross, senior vice president for government relations at the Illinois Health and Hospital Association, stated that the change is a concern because Medicare only covers about 70% of hospital costs. Ben Winick, the vice president of healthcare finance at the Illinois Health and Hospital Association, noted that the hospital provider tax, which finances these payments, will also see a reduction in the cap. These cuts are expected to impact safety-net and critical access hospitals the most, as these facilities rely heavily on Medicaid and Medicare for revenue. Unless Congress reverses these policies, roughly half of the hospitals in Illinois could be forced to reduce staff, cut services, or close entirely.