Alexis Boaz and Torin Shanahan, Associates in the Health Care & Life Sciences and Litigation & Business Disputes practices, respectively, co-authored an article in Health Affairs, titled “A Hybrid Approach to Mounting Pressures on Hospital ED Payment Rates.”
Following is an excerpt:
Hospitals across the country—particularly those operating emergency departments—face a mounting storm of legal, operational, and financial challenges. Unfortunately, the industry can expect significant changes from the July 2025 budget reconciliation law to further increase such pressures, largely due to the law’s extensive Medicaid cuts. Hospitals with emergency departments, which must operate in compliance with the federal Emergency Medical Treatment and Labor Act (EMTALA), will particularly be adversely affected by these cuts. While EMTALA’s mandate for hospitals to screen and stabilize all patients has been critical to improving patient access to emergency care, EMTALA fails to adequately address the financial burdens and uncertainties it creates for emergency departments that furnish such services—particularly with respect to both uncompensated care and payment for out-of-network emergency services. As a result, hospitals are experimenting with new payment approaches that can create a more sustainable revenue stream.
Hospital Emergency Departments May Face Surges In Uninsured Patients And Uncompensated Care
The Congressional Budget Office estimated that the July 2025 federal budget law—formerly dubbed “One Big, Beautiful Bill”—would slash federal Medicaid spending by $911 billion over the next decade, which could result in more than 10 million individuals losing Medicaid coverage, a surge in the uninsured population, and adverse impacts to hospitals’ disproportionate share hospital payments. This rise in uncompensated care places heavy financial pressure on hospitals already operating on thin margins, will jeopardize sustainability of safety-net institutions, and will further strain the nation’s emergency care infrastructure that serves the most vulnerable patients.
