U.S. debt default could endanger provider payments

May 24, 2023


Hospitals and health systems hope for a resolution to the federal government’s debt ceiling standoff, warning that a failure to reach an agreement could have a catastrophic impact on provider payments.

Republicans and Democrats continue to haggle over a deal to raise the $31.4 trillion national debt limit and keep the U.S. from defaulting on its agreements, potentially in early June.

It is unclear which programs the federal government would prioritize if legislators fail to reach a resolution before money runs out, said Alice Burns, associate director for the Program on Medicaid and the Uninsured at KFF.

Depending on what the government decides, providers could face delays or cuts to Medicare and Medicaid reimbursements.

About 70% of Medicaid spending comes from the federal government. Without the funding, states would have to decide whether to pick up the difference and whether all providers would be equally affected.

Once a choice is made, providers could feel the impact within days, said Richard Gundling, senior vice president at the Healthcare Financial Management Association.

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