It’s been just over a year since President Donald Trump signed HR 1 into law. Since then, hospital and health system CFOs have moved from reviewing its legislative text to living with its early effects.
The legislation aims to reshape Medicaid financing through eligibility changes, new work requirements set to take effect Jan. 1, 2027, for many states and cuts to state-directed payment programs, healthcare finance leaders say these effects have already influenced how they forecast revenue, uncompensated care and long-term investment.
Although the law’s steepest reductions have yet to hit, CFOs have braced for a phased rollout over the next few years that will test their ability to manage coverage churn, increased uncompensated care and shrinking safety-net funding, all while pushing to preserve patient access.
Becker’s connected with Leslie Flake, CFO, system and operations finance at Renton, Wash.-based Providence, to discuss HR 1’s financial impact one year in and how the law is shaping health system approaches to planning, board education and resource allocation.
Question: One year in, what has been the most significant financial impact of HR 1 on your organization so far? What are you budgeting for as work requirements and directed payment cuts phase in over the next two years?
Leslie Flake: One year after enactment, the most significant impact of HR 1 has been the need to plan for materially lower Medicaid funding and coverage over time while continuing to meet the health needs of our communities. While many of the largest reimbursement reductions have not yet taken effect, the implementation of eligibility changes and work requirements is already influencing how we forecast revenue, uncompensated care and long-term investment decisions. As we look ahead, we are budgeting for increased coverage churn, higher levels of uncompensated care and the gradual impact of reductions to state-directed payment programs. Providence’s approach is grounded in responsible stewardship. We are carefully managing resources while working to preserve access to essential services, particularly for vulnerable populations, rural communities and those who rely on Medicaid for their care.
How has HR 1 changed your approach to financial planning, board education or resource allocation?
LF: For our leadership teams, the conversation has become less about a single policy change and more about understanding how coverage, reimbursement, workforce and community health dynamics intersect over time. From a resource allocation perspective, we are prioritizing investments that help patients maintain coverage, strengthen financial assistance pathways and preserve access to essential services in the communities we serve. We face several hard decisions as reimbursement for safety net services will significantly decline. We are educating our board and leadership teams about these difficult decision points as we work to maintain as much access to care as possible.
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