When pandemic-era continuous Medicaid coverage ended in 2023, every state resumed eligibility redeterminations. The results were dramatic: more than 25 million people nationally were disenrolled during the “Medicaid unwinding.”
The effects were particularly severe in states such as Florida, Texas, Arkansas, Montana, Utah, Idaho and Oklahoma. Florida removed approximately 1.3 million people, while Arkansas completed an unusually rapid six-month review that removed more than 427,000 residents.
Some individuals were no longer financially eligible. But many lost coverage for procedural reasons—unreturned forms, outdated addresses, missed notices or incomplete documentation—without a definitive determination that they were ineligible.
For the affected person, this can mean more than simply changing insurance plans.
People who lose Medicaid may delay physician visits, skip prescriptions and avoid diagnostic testing. Some transition to employer coverage or an Affordable Care Act plan, but others become uninsured—at least temporarily. Patients frequently do not discover the termination until a hospital, physician or pharmacy checks eligibility.
Hospitals then inherit the consequences.
An uninsured patient still arrives in the emergency department, requires inpatient treatment and needs follow-up care. What previously generated a Medicaid payment may become charity care or bad debt. Safety-net hospitals, children’s hospitals, rural facilities and hospitals serving communities with high Medicaid enrollment carry a disproportionate share of this burden.
The Medicaid unwinding can also affect Medicare Disproportionate Share Hospital payments.
The Medicare DSH calculation includes a Medicaid fraction based generally on inpatient days for patients who were eligible for Medicaid but not entitled to Medicare Part A. When patients lose Medicaid eligibility, their inpatient days may no longer qualify for the Medicaid fraction. A declining Medicaid fraction can reduce the hospital’s DSH percentage and, in some cases, threaten its status as a DSH hospital.
This can create a painful contradiction: a hospital may serve more uninsured patients and incur more uncompensated care while simultaneously reporting fewer Medicaid-eligible days and receiving less traditional Medicare DSH reimbursement.
There is also an effect on Medicare uncompensated-care payments. Medicare distributes its uncompensated-care pool among eligible hospitals using each hospital’s relative share of uncompensated-care costs, primarily derived from
Medicare cost report Worksheet S-10.
More uninsured patients can increase a hospital’s charity-care and bad-debt costs reported on S-10. However, this does not produce an immediate or dollar-for-dollar payment. The data enter the Medicare calculation after a substantial lag, and the hospital receives only a relative share of a fixed national pool. If uncompensated care rises broadly, an individual hospital’s percentage of the pool may not improve at all.
Hospitals should therefore treat the Medicaid unwinding as more than an eligibility-department issue. Finance, reimbursement, patient access and revenue-cycle teams should monitor the following:
- Medicaid inpatient and outpatient volumes by month
- Medicaid-eligible days used in the Medicare DSH calculation
- Uninsured and self-pay conversion rates
- Charity-care approvals and documentation
- Bad debts and collection outcomes
- Worksheet S-10 reporting
- Retroactive Medicaid eligibility and reinstatements
- Changes in state Medicaid DSH and supplemental payments
The impact will not appear everywhere at the same time. Disenrollments began during 2023, but calendar-year 2024 hospital data may provide the first complete picture. Cost reports, claims data and eligibility records could show declining Medicaid utilization accompanied by rising self-pay and uncompensated-care costs.
This was not merely an administrative cleanup of Medicaid enrollment files. It transferred substantial financial risk from government programs to patients and the hospitals that continue treating them.
For hospital leaders, the central question is no longer how many people were removed from Medicaid. It is how much of their care—and its cost—was transferred to the hospital.
