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A new Commonwealth Fund analysis estimates U.S. hospitals’ annual operating margins will drop by 12.5% to 14.2% in 2027 should mandatory Medicaid work requirements take effect. Compared to current law, Medicaid expansion state hospitals’ collective 3.6% operating margin would drop between 0.4 percentage points and 0.5 percentage points with the change. That reflects a $10.9 billion to $12.4 billion hit to total operating revenue (a 0.9% to 1% decline) and a smaller $5.5 billion to $6.3 billion drop in total operating costs (both a 0.5% decline).
Telehealth groups and providers have been urging lawmakers to take action for weeks, arguing that patients rely on telehealth services and providers need clarity on Medicare policy. The flexibilities, popular with lawmakers on both sides of the aisle, were enacted during the COVID-19 pandemic to preserve access to care. Previously, coverage of telehealth in Medicare was largely restricted to beneficiaries living in rural areas or to certain types of facilities or services.
The number of hospitals facing readmission penalties of at least 1% is set to increase in fiscal year 2026, according to preliminary data from CMS released Sept. 19. Beginning Oct. 1, 240 hospitals (8.1%) will be subject to penalties of 1% or more under the Hospital Readmissions Reduction Program. That is up from 208 hospitals (7%) in fiscal 2025.
Urban hospitals have faced mounting pressures in recent years, with closures outpacing new openings from 2019 to 2023, according to a recent report from the Government Accountability Office. The GAO reviewed five urban hospitals that closed in 2022 and 2023 to better understand the financial and operational challenges leading to their shutdowns and how those closures reshaped community access to care.
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