July 16, 2025 • 52 mins
Join Andy Page, national healthcare reimbursement leader at Forvis Mazars, as he fills in for regular host Chad Mulvany to share the latest healthcare policy and legislative updates for the week of July 13, 2025—first and foremost, passage of the reconciliation bill known as the One Big Beautiful Bill Act.
Later in the episode, Chad is joined by guest Peter Stille, managing director in the Healthcare Consulting practice at Forvis Mazars. Together, they’ll discuss the impact of evolving tariffs and trade policies and explore strategies to help healthcare organizations manage rising costs.
- Washington Watch With Andy Page (1:20)
- Stille Interview (25:00)
Learn more about the show at forvismazars.us/AchievingHealthPodcast. Subscribe to healthcare FORsights™ to receive tailored insights on the sector directly to your inbox.
See strategies for responding to Medicaid cuts in the One Big Beautiful Bill Act.
Read more insights on responding to tariffs.
Download our Healthcare Market Point of View: Achieving Health.
Download our Mindsets 2025 Healthcare Executive Leadership Report.
Questions? Contact us.
Connect on LinkedIn:
Healthcare Practice at Forvis Mazars
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
On today's episode of Achieving Health,we have the latest policy and legislative
updates from Washington, D.C.,for the week of July 13th, 2025.
And then I'll be joined by my colleaguePete Stille,
managing director in the HealthcareConsulting practice at Forvis Mazars.
We'll discuss the impactof evolving tariffs and trade policies,
(00:21):
and explore strategies to help
healthcare organizationsmitigate the impact of rising costs.
Stay tuned.
This is Achieving Health.
A podcast from Forvis Mazars,where we delve into the topics that matter
most to healthcare organizationsacross the continuum of care.
Our goal is to help younavigate the dynamic healthcare landscape
(00:43):
and achieve health at your organization.
Here's your host, Chad Mulvany.
Welcome to Achieving Health.
I'm Chad Mulvany, director inthe Healthcare Practice at Forvis Mazars.
Thank you for joining me.
Let's
begin with Washington Watch,where we share updates
on the most recent actions and discussiontopics among federal policymakers
(01:06):
and their anticipated impacton healthcare providers and payers.
Filling in for me on today'ssegment is Andy Page,
National HealthcareReimbursement leader at Forvis Mazars.
Andy, greatly appreciate the assist.
Thanks, Chad. Happy to help.
Today's Washington Watch reflectsinformation as of July 11th, 2025.
(01:27):
So just keep in mindthat this is all subject to change.
First, we want to talk about the OneBig Beautiful Bill Act.
So, the House passed the Senate version
of the One Big Beautiful Bill Actwithout amendment on July 3rd,
and the president signed that into law onJuly 4th.
(01:48):
So we'll spend a bit of timetalking about what's in it.
The 340B rebate
model litigationis also kind of a hot topic right now.
A second federal court has ruledthat while the statute allows HRSA
to implement rebate modelsin a 340B program, manufacturers
may not unilaterally implement one.
(02:08):
So we'll discuss thatin a little bit more detail.
And then finally, we'll look at the 2026proposed Home Health Payment update.
CMS has proposed a pretty significantcut in payments for home health agencies
due to a budget neutrality adjustmentassociated
with the implementation of the PDGM homehealth payment system.
(02:30):
Also wanted to notethat as of this recording, we're still on
watch for the 2026 outpatient PPS rule,
as well as the physician fee scheduleproposed rule.
So, they will likely be outby the time you're listening to this.
So Chad will unpackboth of those rules on our next episode.
And there's even a potential that we mayhave our hands on the final inpatient
(02:52):
rule, as well as the final skillednursing facility rule by the next episode.
So stay tuned on that.
So, with that, let's get into our topicsfor this episode,
starting with the One Big Beautiful BillAct, or we’ll refer to this
as the reconciliation billthroughout the rest of our time today.
But that becomes law.
Despite the sound and the furyfrom a lot of Republican representatives
(03:15):
across the spectrum,the House passed the unamended Senate
version of the reconciliation billwith a vote of 218 to 214.
So if you remember back into the days
leading up to the July 4thholiday, Speaker Johnson, House
Republican leadership and President Trumpwere able to overcome a lot of concerns
about the bill through a combination of,we'll call it
(03:38):
arm twisting or arm wrestling, as well ascommitments from the White House
on a variety of topics, especially onhow the bill is actually implemented.
President Trump signed that into law onJuly 4th.
So, it became reality over the July 4thholiday.
The holdouts on the Republican sidediscussed future legislative
(03:59):
opportunities,including a second reconciliation package
and the possibility of executivebranch moves to address
some of the things that just didn't sitwell with folks.
So, things like Medicaid cutsand all of the hot topic items
that had a lot of resistancefrom the Democratic side
(04:20):
and even some holdoutson the Republican side.
At the end of theday, I think we all remain
a little bit
skeptical that Speaker Johnsonand Majority Leader
John Thune will be able to musclethrough a second deficit
reduction reconciliation bill, givenit would likely focus on
entitlements such as Social Security,Medicare and Medicaid.
(04:41):
So all of the hot topic itemsthat were in this reconciliation bill
and any further reconciliationbill wouldn't have as many items
to sweeten the pot
as we have seen with this recent bill,which includes a lot of tax reduction.
So the idea that a second
reconciliationbill can come with mostly just cuts
(05:03):
without much upside, that seems ambitious.
But that being said, that trifectaof Speaker Johnson,
Thune, and PresidentTrump have been able to work magic
around every turnto get the reconciliation bill passed.
The promise to use administrative actionsand executive orders to address parts
of the bill that members don't likecould be good or bad.
(05:27):
Good, meaning we're taking interpretationsof the statute
that soften Medicaid cuts, or bad,taking more aggressive
interpretationsthat kind of compound the negative impact.
Given the leanings of the leadershipteam at CMS, our guess is the former,
that it will probably be moregood than bad because Medicaid
(05:50):
cuts were the most polarizing topicwithin the reconciliation bill.
And to use executive orders to softenthat may go a long way
with some of the folks that have beenon the other side of the conversation.
Total impact of the reconciliation bill.
So Congressional Budget Office projectsthe final version will reduce Medicaid
(06:12):
spending over ten yearsby more than $1 trillion.
CBO also reported that the uninsured rate
could increase by 17 million individualsby 2034
due to Medicaid, the health exchangeand other provisions of the bill.
Despite the Medicaid cuts, the legislationincreases the deficit by 3.4
(06:33):
trillioncompared to the 2025 budget baseline.
So that was basically the topic
of most concern with everyonethat we've passed to reconcile a bill
that actually increases the deficitby $3.4 trillion, to be determined
what any of these aforementioned tacticscould do to that,
(06:56):
to make that deficit kind of go down,but to be determined.
At the state level, the KaiserFamily Foundation has projected 30
states will see cuts in federal Medicaidfunding of more than 13%.
Louisiana and Virginiaare probably the most heavily affected,
with spending cuts estimated at 21%over the period of impact.
(07:19):
How this impacts a specific providerin a specific state will depend heavily
on that state's policy,so the choices in how
they respond to these cuts in federal
funding and how to reconcile thatwith state funding.
So, clearly this will impact the statebudgeting process for those states
(07:40):
that are looking at a high impactfrom the reconciliation bill.
In our previous episode, we
covered pretty in-depththe Medicare/Medicaid provisions
in a Senate version of the bill,which is ultimately what passed.
So here we'll provide a brief overview
of the provisionsin the enacted legislation,
(08:00):
including some noteworthy changes fromthe earliest version of the Senate bill.
So provider taxes is our first topic.
As of the date of enactment,the legislation as passed freezes provider
taxes and sets the hold harmless thresholdfor any new taxes at 0%.
So basically,you're freezing the provider taxes
(08:24):
where they are,and you're eliminating any net new taxes.
For non-Medicaid expansionstates, existing provider taxes
remain frozen at the rateas of the enactment of the bill.
For expansion states, existingprovider taxes will be phased down by half
a percentage point per yearstarting in FY 28
(08:45):
until they reach 3.5% in 2032.
So that is down from the 6% maxthat we currently have in place
for provider taxes.
This is probably the most impactfulMedicaid component
from a strictly payer source.
So the provider tax that funds
(09:08):
a lot of the Medicaid programs
in respective states,
if you're an expansionstate, will be phased down over the years.
So the question becomes, is therea benefit of being in a non-expansion
state because of the freeze versusbeing in an expansion state
(09:28):
based on the phase-downover a four-year period?
Probably the good news on the provider taxtopic is nursing homes and intermediate
care facilities in expansionstates will not be subject to phase-down.
So basically nursing homesand intermediate care facilities are held
harmless to the extent
that they're frozen at the amountthat they have provider taxes now.
(09:52):
And that was a very polarizing subject
with the associations that representnursing homes and intermediate care
facilitiesjust based on the volume of Medicaid and
the impact that provider tax reductionswould have on that sub-industry.
The enacted bill also revisesthe circumstances under which
the requirements for provider taxesbe broad-based and uniform.
(10:15):
So currentlythere's a waiver on broad-based,
meaning applicableto everyone, and uniform,
meaning the same rateor the same level of rate.
So there are some changes in circumstanceswhere those waivers
are actually approved.
So this provision is similarto what CMS proposed back in May,
(10:36):
which had a very similar impacton provider taxes
and the mechanics of how you buildthose provider tax methodologies.
That ultimately meansthat some current tax programs in several
states are no longer permissible.
So those states are struggling nowto figure out what next
and how do you repurpose the provider taxinto a compliant model?
(11:00):
CBO projectsthe provider tax provisions will save $226
billion over 10 years,and that's actually up from $124 billion
in the House version, primarilybecause the House version
of the reconciliationbill did not have the phase down.
That was part of the Senate billthat ultimately went into
the approved legislation.
(11:22):
So next up,let's talk about state-directed payments.
The enacted bill caps state-directedpayments at 110% of Medicare
in non-expansionstates and 100% of Medicare
in expansion states.
State-directed paymentswith previous approval
or with good-faith efforts to obtainapproval will be grandfathered
(11:42):
through December 31st, 2027,after which they'll be reduced by 10%
annually until they reach these new caps.
Non-expansion states that later expandMedicaid will have their cap
reduced to 100% of Medicare.
The state-directed payment provisionin the enacted legislation
saves $149 billion over 10 years,and that's actually up
(12:05):
from $72 billion estimate in the Houseversion.
While hospital associations and otherprovider organizations will lobby
to delay the provider taxin the state-directed payment phase-down,
we just feel like organizationsshould really prepare
as though these cuts will take effect.
So, a lot of planning to be done.
Another part of the reconciliation
(12:26):
bill was, or is, emergency Medicaid, FMAP.
Effective October 1st, 2026,the bill reduces the FMAP to a state’s
natural match for individualswho would otherwise be eligible
for expansion coverageif not for their immigration status.
So again, this is just a phase-down
on the current FMAP levelsthat can really have an impact.
(12:50):
CBO projectsthis will save $29 billion over 10 years.
And again, the FMAP draw-downfor Medicaid just continues
to be a theme throughout this bill,and that's another example
along with work requirements.
So, work requirements for Medicaidbeneficiaries have been in the news
(13:10):
a lot over the last weeksince the bill was signed.
The enacted bill begins work requirements
for Medicaidbeneficiaries age 19 through 64,
and that would go into effectDecember 31st of 2026.
The legislation does allow the Secretaryto exempt states
from compliance with the new requirementsuntil December 31st, 2028
(13:33):
if the state is demonstratinga good-faith effort to comply.
So you do get a window to exerta good-faith effort and still be exempt
from the new requirementswhile you continue to get better.
Those that are subject to the workrequirements must work or engage
in other qualifying activities, sothis includes community service, education
(13:53):
and training programsfor at least 80 hours per month.
The net effect of all of this, perthe CBO, projects
that this will save $325billion over 10 years.
Although work requirementsare the largest single source of Medicaid
savings in the bill, they may not resultin a significant immediate
(14:15):
increase in uncompensated carefor hospitals and health systems,
given that pregnant womenand individuals with disabilities,
among other groups, are exemptfrom those work requirements.
So there's some anxiety with hospitalsand health systems
under the uncompensated care costs,but there's probably some delay,
(14:36):
as well as just less of an impactbased on the excluded parties.
The biggest initial impactof this provision
will likely be on Medicaid managed careorganizations based on their enrollment.
Providers will likely see some decreasesin utilization for ambulatory services
for Medicaid beneficiarieswho have lost coverage.
(14:56):
So it'll be even more importantmoving forward to verify coverage
prior to care delivery,especially for any non-emergency services.
Medicaid eligibility
redeterminationis also a part of the bill.
So, effective for Medicaid coveragerenewals on or after December
31st, 2026, the bill requireseligibility redetermination
(15:20):
at least once every six monthsfor the expansion population,
so in other words,the verification of eligibility
will be on a faster cadence to make surethat folks are still covered for Medicaid.
So the CBO projects this will save about$62 billion over 10 years for those folks
(15:41):
that have stayed on Medicaid longerthan their eligibility would prove.
The nursing facilityminimum staffing requirement
was also referenced in the reconciliationbill.
And specifically, the bill says uponenactment, the bill prohibits
implementation of the minimum staffingrequirements through September 31st, 2034.
(16:03):
The minimum staffingrequirement was put into law back
in April 2024with a future date of implementation.
This basically, it's a death knell
on the staffing ratio or minimumstaffing requirement.
It basically delays it for ten years,which effectively makes it go away.
(16:23):
Now the CBO does project that this willsave $23 billion over those 10 years.
However, that $23 billion was really never
earmarked to fund the staffing ratio.
I think it was more of athought of CMS will have to fund something
to implementa minimum staffing requirement
But nonetheless,that's been a sticky subject
(16:45):
with the nursing facility industryand probably some good news
moving forward that those minimum staffingrequirements are not implemented.
The physician feeschedule is also referenced in the bill.
The bill provides a 2.5% increasein the physician fee schedule conversion
factor for services after January 1st,2026 through December 31st, 2026.
(17:07):
So this is a change from the previousHouse version, which provided
an update of basically 75%
of the Medicare Economic Index
and then 10% of the Medicare EconomicIndex thereafter.
So the CBO does project that this increase
will cost about $2 billion.
(17:28):
So let's talk about the Rural HealthTransformation Fund.
The enacted bill provides a $50 billion
fund over five years to supportrural health transformation.
This is actually an increasefrom the $25 billion fund previously under
consideration, and a change that occurredbefore the bill passed the Senate.
(17:49):
States will need to apply for the funds,
which will be allocated in partbased on each state's rural population,
as well as the proportion of rural healthfacilities located in that state.
It will be up to the statesto determine how the funds are used
and who receives them.
Funds may be used for a varietyof health-related activities, including
(18:09):
chronic disease prevention and management,adopting technology
to improve careand improving payment for services.
There is a
bit of change in the final reconciliationbill,
or One Big Beautiful Bill,that is different from previous versions.
So let's talk a little bit about those.
Medicaid DSH delay was not includedwhile the House version of the bill
(18:31):
delayed the Affordable Care Act's MedicaidDSH cuts until FY 2029;
this delay was removed
from the Senate versionand actually enacted in final legislation.
So unless Congress interveneson this, Medicaid DSH payments will be
reduced by $8 billion in FY 26.
The FMAP reduction for statesthat cover undocumented
(18:54):
individualswas also not included in the final bill.
While the House-passed versionincluded language
that would lower the FMAP from 90 to 80for expansion states
if Medicaid or other state-run programsprovide health coverage
for immigrants who aren't otherwiseeligible for certain public benefits.
The Senate parliamentarian ruledthat this language
(19:14):
was extraneousand it was not included in the final bill.
And finally, whilenot a specific provision of the bill,
the enacted legislation actually increasesthe deficit by $3.4 trillion
and therefore may triggerthe pay-as-you-go mandatory sequester.
And if so, current law requiresa sequester of certain mandatory
(19:37):
spending programsunless Congress steps in to prevent it.
So in the event of a sequester, reductions
to Medicarespending would be limited to 4% annually.
The CBO is the ultimate arbiterof whether the pay-as-you-go kicks in.
Even though the Senate passed
the bill under current policy baseline,meaning for their purposes,
(19:57):
the bill reduces the deficit by $400billion over 10 years.
It's unlikelythe CBO will use current policy baseline.
So that's our summary of the OneBig Beautiful Bill Act
and the implicationson all of our healthcare providers.
If you'd like to learn more abouthow the bill impacts your organization
(20:17):
or how you can respond to changes,
we have a link to a related FORsightsarticle in the show notes.
So let's turn to an update on 340Brebate model litigation.
On June 27th, Federal District Court Judge
Rudolph Contrerasruled that pharmaceutical manufacturers
cannot unilaterally implementa 340B rebate model.
(20:39):
This ruling marks the second timein six weeks that a federal judge
upheld HRSA’s authorityto pre-approve 340B rebate models.
While both rulings sidedwith the government, neither ruled out
the possibility that HRSA could authorizerebates in the future.
Not surprisingly, hoursafter that decision, the plaintiff,
(21:00):
Johnson and Johnson, filed an appealwith the US Court of Appeals for the D.C.
circuit.
Similarly,Eli Lilly, Bristol-Myers, and Novartis
have also appealed that May 15th decision.
Per the 340B report, Johnson & Johnson
met with the OMB staffersand HHS Deputy Director Herzog
to discuss the proposedrebate model under review at OMB.
(21:23):
Johnson &
Johnson noted in the presentationthat the model only applies to two drugs,
and they will pay within 7 to 10 daysupon receipt of verified claims data.
However, this overlooksthe unnecessary administrative burden
this creates for already cash-strappedproviders,
especially given the cutsin the reconciliation bill.
Finally, as we've discussed before, giventhe manufacturers will be the arbiter
(21:48):
of the data necessaryto provide the rebate,
we have some concerns about providersgetting shortchanged.
Finally, let's discuss some key provisionsin the 2026 home health proposed rule.
On June 30th, CMS issued the proposedrule for Home
Health Perspective Payment Systemfor calendar year 2026.
(22:08):
The overall economic impactrelated to the changes in payments
is estimated to be a decrease of $1.135billion,
or -6.4%.
The decrease actually reflectsthe net effect
of the following components.
First is a proposedmarket basket update of a net 2.4%.
(22:31):
So that's a $425 million increase.
There's a proposed permanent adjustmentof roughly -4%
to account for behavior changesrelative to the implementation of PDGM.
So that's effectively a parity adjustmenton what CMS believe
would happen with PDGM versuswhat did happen back in 2020.
(22:55):
So material changes
like changing from a 60-day episodepayment to a 30-day episodic payment.
There's also a proposed 5% adjustment
for what CMS is defining as overpayments.
So this is a temporary adjustmentspecific to calendar year 2026.
The process CMS uses to calculatethe market basket update
(23:17):
in various payment systems, not just homehealth, has some well-understood flaws.
The problem is compoundedby the PDGM budget neutrality adjustment.
And that's putting a further strainon home health providers.
All of the associationsthat represent home care,
both nationally and at the state level,believe that the methodology used
(23:37):
to calculatebudget neutrality is also flawed.
It doesn't accurately account for shiftsin care delivery and utilization under
the new payment system and doesn'taccurately compare hypothetical payments
under the old payment systemto those under PDGM,
and as a result, it continuesto overestimate the difference in overall
(23:58):
spending between the oldand the new payment systems.
If we can even call them old and new,given that PDGM has been around
for five years.
Prior comment letters from associationsrepresenting home health providers
have used data from referral managementplatforms to demonstrate an increase
in patients referred to home healththat were unable to be placed,
(24:20):
and they attribute this to CMS’ budgetneutrality reductions
for home health payments,coupled with increased labor cost.
And there's a managed careimplication on home health as well.
So assuming all of this analysis iscorrect, further cuts will limit access
to home care and possibly createthroughput issues for hospitals.
(24:41):
So this concludes today's WashingtonWatch.
Up next, Chad will be backwith a conversation with Peter Stille
about the tariff landscape and its impacton healthcare organizations.
I'd like to welcome our guest for today'sepisode, Peter Stille,
(25:03):
managing director in the HealthcareConsulting Practice at Forvis Mazars.
Pete leads the practice’s non-labor
cost management services and bringsmore than 30 years of experience
helping healthcare organizationsreduce cost and improve performance.
Pete, thanks for joining us today.
Thanks for having me, Chad.
I'd like to start by asking youto share a bit about the work
(25:25):
you do with healthcare organizationsand generally, what led you to the field?
Yeah, well. Thank you.
I have spent my career
doing non-labor consultingand I lead that practice here.
We help our clients
lift margins in supplies,purchase services and benefits.
(25:48):
All areasthat are not labor or salaries.
And I was always drawn to consulting,I think, because I did want to
make a difference and help clients.
And with non-labor, you know,I think it gave me a challenge
to always learn every day.
(26:08):
There's a lot of different aspectsof non-labor, from paper towels
to spinal implants to employee benefits,and different challenges
to help us find solutionsto help our clients.
And, you know, I had the opportunity,when I started my career
with Anderson in the 90sto work in Fortune 500 organizations.
(26:31):
But I stayed in healthcare
because I really like to seewhat the impact that these solutions
can have for the good of their marginsand their communities.
I just think that meaning waswhat was very satisfying for me.
And, you know, Peter,before we get into our conversation,
one of the things that I've appreciatedabout your approach to this is,
you know, it's one thingto sort of benchmark and figure out
(26:53):
where there are opportunities,but it's a whole different set of issues
to actually gorealize those opportunities.
And what I really enjoy watching
about what you do is the factthat you really do approach it as a change
management challengeand think about it through that lens.
So it's sort of step one,find the opportunity, step
two figure out how to get the organizationto capture those savings
(27:14):
or what the organization can captureand then go after what's realistic.
Yeah, I couldn’t have said better myself.
I never want to be that consultantthat put a fancy book
on the shelves that no one ever reador did anything about.
It was all about the solutionsand measuring what impact
that you had
and that the client could,you know, benefit from.
(27:35):
So, from my perspective,the identification of the solution
and, you know, the brain power to get youthere is really the start of,
what is then the trickier part,to actually get it done.
On the topic of input costs,
one of the concerns on everyone's mindright now is the impact of tariffs.
Obviously, you know,we have the tariffs on China,
(27:59):
Mexico and Canadaas it relates to immigration and fentanyl.
We have the across-the-board 10% tariffs.
We have the reciprocal tariffs
at various rateson various trading partners.
And then we have individual tariffsin certain industries:
aluminum, cars, etc.
(28:20):
We recently in May had a court decision
that found that the reciprocal tariffs,
the tariffs on China, Mexico
and Canada were invalid, that they were
and that they were an overextensionof the president's authority.
(28:42):
And so the ability the president
to implement those tariffshas been questioned by a court.
We've had an appeals courtthat has stayed the injunction.
Really, a long-winded way of sayingthat it's a pretty uncertain environment
in terms of tariffs.
We know they're out there.
They're sort of looming over everybody.
But you know,whether they'll go into effect
(29:02):
and to what extent given to the president,even if they survive legal challenge
is “negotiating”with the various countries.
What questions have you heardfrom the providers you work with
about these tariffs?
Well, Chad firstlet me say I love how you teed that up.
When you said the word uncertain,
(29:24):
that was probably as much workas I heard that word do in a long time,
and it very appropriate, because that isreally what's happening here
is, and the questionsthat we're getting is,
what are we supposed todo with all this uncertainty?
How am I supposed to
forecast what my supply costs are going to be?
(29:45):
What my exposure to supply interruption is going to be?
What can we do about these tariffs
to be able to handle them
and still keep about, pursuing the mission of the organization?
And, on top of all of the things that youmentioned, I did want to add that,
you know,the administration is also giving signals
(30:07):
about the short-term natureof these tariffs that
there are negotiations to be had to makeit all go away, or a lot of it go away.
So there's complexities on complexitieswhen you're looking at that and,
what I'm hearing from clients,they're typically falling
into one of those buckets.
So a lot of
questions right nowlet's break it down a bit.
(30:28):
How can CFOs and other finance leadersat these organizations
gain insight into the full scopeof input items impacted by the tariffs?
Luckily, this is a big enough dealwhere there is a lot
of information out there.
And good information.
(30:48):
We have been watching this closely.
I like some of the analysisthat the budget lab at Yale is doing.
They are analyzing each tariffannouncement.
They’re gaming out what the short-term
and long-term effects are with actuaries.
(31:09):
But they can only take us so far.
And, you know,what are the things they can't,
you know, predict is,what's going to happen tomorrow?
They're really just gaming outwhat it is today.
But when our clients are thinking abouthow to forecast,
how to budget, how to justifythe financials
that they want the blessing ofthe board and the C-suite on,
(31:33):
we see them turning to,
outside resources and see them turningto their existing supply chain partners.
GPOs are publishing what they think are
inflationarythings to account for by category.
Distributors are doing the same,
from looking at alternative products
(31:55):
and sounding the alarmabout suppliers to them
that aren’t playing nicely,
and where they think that there'ssome exposure about being able
to get supplies at the costthat they were paying yesterday.
And the good newsis, we've had some of this practice
with the pandemic a few years ago.
It's just,I think, a little bit broader reach
(32:17):
and a little bitof more uncertainty around it.
And when you do look at these categories,
it's interestingbecause it does break down to
looking at those
categoriesthat are really at the most risk
of impacting your budgetsand, potentially,
(32:38):
your supplies and availability
for a healthcare providerto be able to take care of their patients.
Feeding
tubes, internal tubes,are always exclusively made in China and
those are under significant tariffsright now.
(32:58):
Being able to replace those is
a solution no one's figured out yet.
Personal protective equipment.
This has got, still 50% of the world'sproduction made in China.
And, you know, they, rightnow, actually, before the May 12th
rescinding, most of the tariffs.
(33:20):
So, 245% tariff.
Now it's just 30,but still, you know, 30%
more than it was, a few months ago.
Pharmaceuticals,most of it is made in China.
Even the generics made in Canada,if they take a 10% hit,
that's going to add $51 billion to the USmarket cost for, pharmaceuticals.
(33:41):
Plastics, textiles, imported
steel, even IT has crept up on some of the radars
in terms of, you know,those areas that could be impacted.
One of
the things that I've seen is that it's,
I wouldn't say random,but there is definitely a strategy here
where, and some companiesare better positioned for the short term.
(34:05):
If you are manufacturing medical devicesin Mexico,
and a lot are,those factories are going 24/7 right now.
You can import those devices under,
with 0% tariffs because NAFTA
creates an exemption for themif they're NAFTA compliant.
And actually if you need to importsteel to do it domestically,
(34:29):
there's actually an advantage to doing itin Mexico and not having to pay for that
with the ingredient cost.
So, beyond forecasting,then there gets into the mitigation
strategiesabout working with suppliers have got,
this, this mapped out so they could avoidas much of the burden of this
as is being presentedcurrently in the environment today.
And, you know,
(34:50):
any changes in the supply chainwill have an impact on clinical staff.
What steps can healthcare organizations
take to manage the impact and help staffnavigate these changes?
I think involving them, both in terms of
the decisions that are being madeand getting their input.
(35:11):
I think about it as
part of the teamthat is interdisciplinary,
looking at this data, helpingget that clinical perspective.
You know, for those products
and categories that have exposure
that affect patients’ and nurses’ lives.
(35:32):
What things should they keep in mind
as they're researchingalternatives and timing?
As they look at this,what is their comfort level to stock up
and buy safety stock
to avoid purchasing something at twicethe cost in 90 days.
(35:53):
And they might see, you know,an increased demand, or the fact that
making a conversionof gloves is going to take several months.
So even though that may not beas big of an exposure,
you might want to buymore inventory of that because that
that transition is going to bea little bit more time consuming.
And then also involve them inhow those products
(36:16):
and those solutions are investigated.
Do they need to be a pilot?
Typically, organizations will,you know, carve it up into commodities.
Clinical preferencein high clinical physician preference
to determine what things can goautomatically, what things need a trial,
what things need to be sample reviewed,
(36:38):
and make sure that is includingthe voice of the customer
and the voice of the clinicianso as these changes are thrust upon them.
You know,
back to the earlierpart of the conversation
when we were talkingabout change management,
that's the piece
that organizations really needto make sure that they pay attention to.
You know, beyond just making surethat they can secure things that that are
(36:59):
less impacted by the tariffsbut then also making sure
that the cliniciansare involved in those decisions,
the peoplethat are actually going to be using
the suppliesare brought along for the ride,
and they understandwhy the changes are being made.
They feel like they're being heardas part of that conversation
and ultimately have an opportunityfor some of the more high-use
or high-preference items to kind oftry-before-you-buy, if you will.
(37:20):
That's a really good point you make.
So in that spirit
Chad, I think it's worth emphasizing that,
you know, the communicationhere, beyond those nurses involved,
not only about the strategiesand the involvement of nurses, but
just the anxiety and the facts,
they're being presented to them.
(37:40):
Managing that fear and that uncertaintywell is going to help
reduce the stressof the entire organization and build trust
at a time when tensions are high and,you know, people are working long hours.
I appreciate what you just said.
And I think it's probably worthjust reminding the audience that,
you know,there is still a bit of a hangover
(38:02):
from COVIDand the trauma that everyone went through.
So this needs to be handled carefully,
so as not to exacerbate that experience.
Yeah.
And then last summerthey had the hurricane
come through, and you had IV suppliesthat were,
you know, people were very concernedabout how to take care of patients
(38:23):
and, you know,keep them healthy and be able
to deliver the carethat their patients needed.
So these stresses keep comingand I do think that change management
and attention to that,I think the leading organizations
get right and I think their nursesstick with them longer because of that.
So, Pete,how can providers reconfigure their supply
(38:45):
chains and identifyalternative sources of medical devices
and other suppliesto mitigate the impact of tariffs?
It's a good question.
The good news, and it's challenging.
The good news is that, in healthcarewe've had some practice.
But because of the pandemicand because of some of the shortages
in critical supplies like IV solutions
(39:07):
recently in the southeast.
So essentially the game plan thereand the game plan
today is work with your supply chainpartners, work with
and procure the resources needed to identify where you're exposed.
Evaluate those potential disruptionswell in advance
(39:29):
and then put together a planthat will make sure that you've
got the inventoryto take you through the rough times,
and you've got the timeto evaluate the alternative sources
well in advancebefore it becomes an emergency.
So you know what your options are
(39:49):
and have really expanded the supplier baseand decreased your risk.
And, you know, Peter,we talk about the uncertainty
as being a challenge,
but really to your pointabout exploring options,
I mean, it really is an opportunityto do that.
So it's almost like you've been boughtsome breathing room
in order to make those investigations,make them in a systematic manner.
And then, as you know,we've talked about the change management
(40:13):
piece of it to do the work that you needthere as well.
Yeah.
And that's where I think,you know, the proactive acting
now really helps you get a leg up because
there are some that are watching
and waiting to get more clarityon what there is to do.
But, you know, really, this is just,
(40:34):
you know, good supplychain practice in general.
And when you're handed uncertainty,
in your operationsand your supply chains,
a plan needs to come togetherto help mitigate that risk.
And you can build up safety stock
and try to do itfrom a financial perspective.
But unless you're actively engagingin expanding your supply
(40:58):
chains, helping buy time and
giving you more options, now,
when you know that there's going to haveto be some moves that you need to make
you're going to be better offwhen those times come.
You know, for the moment, pharmaceuticalshave been exempted from tariffs.
However,the president has certainly signaled
(41:19):
that that is in the cardsin a future round.
And in fact, mid-May, the president,or the administration wrapped up
its section 232 investigationinto the national security
implications of pharmaceutical imports,or at least the public comment period
for that wrapped up.
So I think it's safe to saythat we'll be seeing those
(41:40):
in the next couple of months.
How should hospitals and other providers
preparefor pending pharmaceutical tariffs?
You know, there's a lot of concernand rightfully so, on the tariffs so far,
there's kind of been a breath of reliefthat it hasn't included pharmaceuticals.
I think there's been some wishfulthinking that pharmaceuticals may escape.
(42:04):
There's definitely a lot of lobbyingto try to help
make sure that the, like,that likelihood is as high as possible,
because of the essential-nessto the healthcare delivery system.
But it's really a sleepinggiant in terms of impact here.
And, to put in perspective,in the supply chain, if you
(42:27):
put into different categories,pharmaceuticals is the single largest
category.
And tariffs, the impact of tariffshere has a chance to double
the impact in healthcarebecause it is so large.
To address this,you should put plans together,
based on the expectations that you havefor any tariff impacts.
(42:49):
And we see organizationsthat are putting together
conservative, moderate, and aggressiveexpectations of where this is going
in the short-term and a whole other setwhere this is going the long-term.
And they're really assigning
probabilities to that to, you know,figure out what the financial impacts are
and then where their exposure is thebiggest from an operational perspective.
(43:11):
So the same thing should be applied here.
It is just that much more importantto this one singular policy
for this category in the healthcare
supply chain is going to be so important.
You've got a lot of drugs or ingredients that are coming from China.
(43:31):
You have a lot that are coming fromthe European Union.
And I think the right strategy hereis to plan for it now,
the same that you would with others,
and pay particular attentionto this one because it's so large.
And then, when you're
thinking about tariffs in general,from a long-term perspective,
(43:55):
the reciprocal tariffsare probably not sustainable.
But everything that we're seeing isthat the prices are going down.
When you look at the reshoring policiesthat the organization has
to bring operations to the United States,when you're looking at
the direction that we're headed and
(44:19):
that's going to have a major impact.
These are the second largest expensefor healthcare organizations
in their entire expense structure
and it means,
you know, back to your pointabout kind of getting hit on both ends.
You'll be you'll be losingtens of millions of dollars in government
(44:40):
funding for Medicaid reimbursement and
I’ve got a clientthat's modeling this right now
on the tariff side,where there might be very conservatively
right now, $2.5 billion,
with the drugs, it could beit could be double that.
And for the short term,with the reciprocal tariffs,
(45:00):
it could be several times that.
So it's just interesting times.
And unfortunately it's going to requiresome additional investment of resources
to get your arms around this.
Make sure yourorganizations are protected.
Well, and,
you know, whenyou think about the scale of the impact
that we're talking about on both revenueand then on the expense side,
(45:21):
what that suggests to meis that the gap that you may need to fill,
or to find savings for, is big enough
that you can't just look at the impacteditems, be it
pharmaceuticals, at some pointin the future, be it supplies.
So, what are the other areas within thethe non-labor bucket that might present
(45:44):
savings opportunitiesas organizations are trying to offset
these increasing supply costsand the diminished revenue
as a result of anticipatedMedicaid changes.?
The guidance that we're givingand some of the research
that we're seeing is consistent.
That's one, organizations are looking for efficiencies
(46:05):
outside of supplies to offset,those increases.
Your suppliers are doing that.
They're telling in the earnings reportsto investors that they're doing that.
And to some extent, they're able to offsetmost of that, all of that, with
some of the
analyst reports that we've seen to date.
And so that's the good news.
(46:26):
And where does that come from?
Purchased services,where you're really outsourcing labor
and it’s not as supplyintensive, is one example of places
that you cango, we're still seeing good results and
a low change from solutions and,you know,
new approachesin managing employee benefits.
(46:48):
And then looking at theother side of supply chain management
which is utilization,reducing clinical variance,
reducing variance in generaland reducing waste and
looking at getting more control over thoseto make sure that you can
operate as efficiently as possiblewith as little resources
(47:08):
as possible.
And you mentioned the gap in revenue.
And I did want to talk about the factthat the gap,
to the extent that you can't make it up,
your suppliers in healthcare pass it,or are planning to pass it, along to you.
And in other industries,the vast majority of
(47:29):
CEOs are looking at passing those alongto their customers.
In healthcare,the leaders are putting out letters,
trying to get clarification
and communicating and collaboratingbecause there is still,
and I was surprised to see,but happy to see that organizations are,
very commonly, reaching out to suppliersand proactively negotiating,
(47:53):
with them to make sure that
they have a relationship
and a structure that can be successfulduring some trying times.
Asking their suppliersto provide documentation
if there is that need to,you know, revisit where the costs are.
And that gap that you mentioned, Chad,and that documentation
(48:16):
that we should be asking of our suppliersis the same documentation,
the same facts that we can bring to managed care payors
to, you know,show them what the facts are,
from the hospital’s perspective
in this whole headache that's being,you know, thrown at us as far as tariffs.
Yeah. No, that's absolutely right.
(48:37):
And I think as you and I have talkedabout this before, I think one thing
to flag for our listeners as well is,you know,
in 2025, I'm still occasionally surprisedat the percentage
of percent-of-charge contractsthat many providers still have.
And so obviously,make sure that as these price increases
roll through, that your chargemaster is upto date, so that way where you've got
(48:59):
those percent-of-charge contracts,you can benefit from that as well.
And certainlythen on your fixed contracts,
your DRG-based contracts,that also helps you with your outliers.
So just a lot of pieces to think throughand make sure that you're tracking.
And Chad, one of the things thatis one of the first steps we
advise
(49:19):
our clients on the cost sideis to review their contracts
for price protections and the, you know,are you protected?
To some extent,but not as much as you'd like to be.
And so that review can really,you know, give you a sense for
where you're at, where you're exposed
and really the conversationsyou need to have with your suppliers,
(49:43):
and the controls that need to be put in place
and efficienciesthat you need to start to target.
And I think that's great advice.
As we look to wrap up,you know, we've had a great discussion.
You shared a lot of fantastic insights.
What's one piece of adviceyou would give to a CFO or a supply chain
(50:04):
executive as they navigate the tariffsand the uncertainty surrounding them?
I don't know if this is one piece, Chad,but I would advise: don't wait.
Act now.
And I think CFOswill love this: spend more.
I think that
these are the thingsthat many organizations are doing anyway.
(50:27):
And these tariffs,these losses of government funding
that are on the horizon.
And, you know, in recenttimes, the pandemic and other challenges
have shown us just how much more we need to do
to invest in making sure that we have cost structures that can support
(50:48):
not only where we are today,but the future challenges as well.
Pete, thank you again for joining me todayand sharing your insights.
Always great to talk to you.
And also thank you again to Andy Pagefor covering today's Washington Watch.
And I want to thank our listenersfor their time and tuning in.
If you'd like to learn moreabout navigating the impact of tariffs,
we have links to some of ourrelated articles in the show notes.
(51:12):
I hope you'll join me on August 6thfor the next episode of Achieving Health.
Till then, hope everybody stays well.
You can follow
Achieving Healthon your favorite podcast platform or visit
forvismazars.us/AchievingHealthPodcastto learn more.
New episodes are released the firstand third Wednesday of each month.
(51:35):
Achieving Health is producedby Forvis Mazars LLP, an independent
member of Forvis Mazars Global, aleading global professional services
network, ranked among the largest publicaccounting firms in the United States.
The firm's 7,000 dedicated team membersprovide an Unmatched Client Experience
through the delivery of assurance, tax,and consulting services for clients
(51:57):
in all 50 states and internationallythrough the Global Network.
The information set forth in this podcastcontains the analysis and conclusions
of the panelistsbased upon his, her or their research
and analysis of industryinformation and legal authorities.
Such analysis and conclusionsshould not be deemed opinions
or conclusions by Forvis Mazarsor the panelists
(52:20):
as to any individual situationas situations are fact-specific.
The listener should performtheir own analysis and form
their own conclusionsregarding any specific situation.
Further, the panelists conclusionsmay be revised without notice,
with or without changes in industryinformation and legal authorities.
On today's episode of Achieving Health,we have the latest policy and legislative
updates from Washington, D.C.,for the week of July 13th, 2025.
And then I'll be joined by my colleaguePete Stille,
managing director in the HealthcareConsulting practice at Forvis Mazars.
We'll discuss the impactof evolving tariffs and trade policies,
(00:21):
and explore strategies to help
healthcare organizationsmitigate the impact of rising costs.
Stay tuned.
This is Achieving Health.
A podcast from Forvis Mazars,where we delve into the topics that matter
most to healthcare organizationsacross the continuum of care.
Our goal is to help younavigate the dynamic healthcare landscape
(00:43):
and achieve health at your organization.
Here's your host, Chad Mulvany.
Welcome to Achieving Health.
I'm Chad Mulvany, director inthe Healthcare Practice at Forvis Mazars.
Thank you for joining me.
Let's
begin with Washington Watch,where we share updates
on the most recent actions and discussiontopics among federal policymakers
(01:06):
and their anticipated impacton healthcare providers and payers.
Filling in for me on today'ssegment is Andy Page,
National HealthcareReimbursement leader at Forvis Mazars.
Andy, greatly appreciate the assist.
Thanks, Chad. Happy to help.
Today's Washington Watch reflectsinformation as of July 11th, 2025.
(01:27):
So just keep in mindthat this is all subject to change.
First, we want to talk about the OneBig Beautiful Bill Act.
So, the House passed the Senate version
of the One Big Beautiful Bill Actwithout amendment on July 3rd,
and the president signed that into law onJuly 4th.
(01:48):
So we'll spend a bit of timetalking about what's in it.
The 340B rebate
model litigationis also kind of a hot topic right now.
A second federal court has ruledthat while the statute allows HRSA
to implement rebate modelsin a 340B program, manufacturers
may not unilaterally implement one.
(02:08):
So we'll discuss thatin a little bit more detail.
And then finally, we'll look at the 2026proposed Home Health Payment update.
CMS has proposed a pretty significantcut in payments for home health agencies
due to a budget neutrality adjustmentassociated
with the implementation of the PDGM homehealth payment system.
(02:30):
Also wanted to notethat as of this recording, we're still on
watch for the 2026 outpatient PPS rule,
as well as the physician fee scheduleproposed rule.
So, they will likely be outby the time you're listening to this.
So Chad will unpackboth of those rules on our next episode.
And there's even a potential that we mayhave our hands on the final inpatient
(02:52):
rule, as well as the final skillednursing facility rule by the next episode.
So stay tuned on that.
So, with that, let's get into our topicsfor this episode,
starting with the One Big Beautiful BillAct, or we’ll refer to this
as the reconciliation billthroughout the rest of our time today.
But that becomes law.
Despite the sound and the furyfrom a lot of Republican representatives
(03:15):
across the spectrum,the House passed the unamended Senate
version of the reconciliation billwith a vote of 218 to 214.
So if you remember back into the days
leading up to the July 4thholiday, Speaker Johnson, House
Republican leadership and President Trumpwere able to overcome a lot of concerns
about the bill through a combination of,we'll call it
(03:38):
arm twisting or arm wrestling, as well ascommitments from the White House
on a variety of topics, especially onhow the bill is actually implemented.
President Trump signed that into law onJuly 4th.
So, it became reality over the July 4thholiday.
The holdouts on the Republican sidediscussed future legislative
(03:59):
opportunities,including a second reconciliation package
and the possibility of executivebranch moves to address
some of the things that just didn't sitwell with folks.
So, things like Medicaid cutsand all of the hot topic items
that had a lot of resistancefrom the Democratic side
(04:20):
and even some holdoutson the Republican side.
At the end of theday, I think we all remain
a little bit
skeptical that Speaker Johnsonand Majority Leader
John Thune will be able to musclethrough a second deficit
reduction reconciliation bill, givenit would likely focus on
entitlements such as Social Security,Medicare and Medicaid.
(04:41):
So all of the hot topic itemsthat were in this reconciliation bill
and any further reconciliationbill wouldn't have as many items
to sweeten the pot
as we have seen with this recent bill,which includes a lot of tax reduction.
So the idea that a second
reconciliationbill can come with mostly just cuts
(05:03):
without much upside, that seems ambitious.
But that being said, that trifectaof Speaker Johnson,
Thune, and PresidentTrump have been able to work magic
around every turnto get the reconciliation bill passed.
The promise to use administrative actionsand executive orders to address parts
of the bill that members don't likecould be good or bad.
(05:27):
Good, meaning we're taking interpretationsof the statute
that soften Medicaid cuts, or bad,taking more aggressive
interpretationsthat kind of compound the negative impact.
Given the leanings of the leadershipteam at CMS, our guess is the former,
that it will probably be moregood than bad because Medicaid
(05:50):
cuts were the most polarizing topicwithin the reconciliation bill.
And to use executive orders to softenthat may go a long way
with some of the folks that have beenon the other side of the conversation.
Total impact of the reconciliation bill.
So Congressional Budget Office projectsthe final version will reduce Medicaid
(06:12):
spending over ten yearsby more than $1 trillion.
CBO also reported that the uninsured rate
could increase by 17 million individualsby 2034
due to Medicaid, the health exchangeand other provisions of the bill.
Despite the Medicaid cuts, the legislationincreases the deficit by 3.4
(06:33):
trillioncompared to the 2025 budget baseline.
So that was basically the topic
of most concern with everyonethat we've passed to reconcile a bill
that actually increases the deficitby $3.4 trillion, to be determined
what any of these aforementioned tacticscould do to that,
(06:56):
to make that deficit kind of go down,but to be determined.
At the state level, the KaiserFamily Foundation has projected 30
states will see cuts in federal Medicaidfunding of more than 13%.
Louisiana and Virginiaare probably the most heavily affected,
with spending cuts estimated at 21%over the period of impact.
(07:19):
How this impacts a specific providerin a specific state will depend heavily
on that state's policy,so the choices in how
they respond to these cuts in federal
funding and how to reconcile thatwith state funding.
So, clearly this will impact the statebudgeting process for those states
(07:40):
that are looking at a high impactfrom the reconciliation bill.
In our previous episode, we
covered pretty in-depththe Medicare/Medicaid provisions
in a Senate version of the bill,which is ultimately what passed.
So here we'll provide a brief overview
of the provisionsin the enacted legislation,
(08:00):
including some noteworthy changes fromthe earliest version of the Senate bill.
So provider taxes is our first topic.
As of the date of enactment,the legislation as passed freezes provider
taxes and sets the hold harmless thresholdfor any new taxes at 0%.
So basically,you're freezing the provider taxes
(08:24):
where they are,and you're eliminating any net new taxes.
For non-Medicaid expansionstates, existing provider taxes
remain frozen at the rateas of the enactment of the bill.
For expansion states, existingprovider taxes will be phased down by half
a percentage point per yearstarting in FY 28
(08:45):
until they reach 3.5% in 2032.
So that is down from the 6% maxthat we currently have in place
for provider taxes.
This is probably the most impactfulMedicaid component
from a strictly payer source.
So the provider tax that funds
(09:08):
a lot of the Medicaid programs
in respective states,
if you're an expansionstate, will be phased down over the years.
So the question becomes, is therea benefit of being in a non-expansion
state because of the freeze versusbeing in an expansion state
(09:28):
based on the phase-downover a four-year period?
Probably the good news on the provider taxtopic is nursing homes and intermediate
care facilities in expansionstates will not be subject to phase-down.
So basically nursing homesand intermediate care facilities are held
harmless to the extent
that they're frozen at the amountthat they have provider taxes now.
(09:52):
And that was a very polarizing subject
with the associations that representnursing homes and intermediate care
facilitiesjust based on the volume of Medicaid and
the impact that provider tax reductionswould have on that sub-industry.
The enacted bill also revisesthe circumstances under which
the requirements for provider taxesbe broad-based and uniform.
(10:15):
So currentlythere's a waiver on broad-based,
meaning applicableto everyone, and uniform,
meaning the same rateor the same level of rate.
So there are some changes in circumstanceswhere those waivers
are actually approved.
So this provision is similarto what CMS proposed back in May,
(10:36):
which had a very similar impacton provider taxes
and the mechanics of how you buildthose provider tax methodologies.
That ultimately meansthat some current tax programs in several
states are no longer permissible.
So those states are struggling nowto figure out what next
and how do you repurpose the provider taxinto a compliant model?
(11:00):
CBO projectsthe provider tax provisions will save $226
billion over 10 years,and that's actually up from $124 billion
in the House version, primarilybecause the House version
of the reconciliationbill did not have the phase down.
That was part of the Senate billthat ultimately went into
the approved legislation.
(11:22):
So next up,let's talk about state-directed payments.
The enacted bill caps state-directedpayments at 110% of Medicare
in non-expansionstates and 100% of Medicare
in expansion states.
State-directed paymentswith previous approval
or with good-faith efforts to obtainapproval will be grandfathered
(11:42):
through December 31st, 2027,after which they'll be reduced by 10%
annually until they reach these new caps.
Non-expansion states that later expandMedicaid will have their cap
reduced to 100% of Medicare.
The state-directed payment provisionin the enacted legislation
saves $149 billion over 10 years,and that's actually up
(12:05):
from $72 billion estimate in the Houseversion.
While hospital associations and otherprovider organizations will lobby
to delay the provider taxin the state-directed payment phase-down,
we just feel like organizationsshould really prepare
as though these cuts will take effect.
So, a lot of planning to be done.
Another part of the reconciliation
(12:26):
bill was, or is, emergency Medicaid, FMAP.
Effective October 1st, 2026,the bill reduces the FMAP to a state’s
natural match for individualswho would otherwise be eligible
for expansion coverageif not for their immigration status.
So again, this is just a phase-down
on the current FMAP levelsthat can really have an impact.
(12:50):
CBO projectsthis will save $29 billion over 10 years.
And again, the FMAP draw-downfor Medicaid just continues
to be a theme throughout this bill,and that's another example
along with work requirements.
So, work requirements for Medicaidbeneficiaries have been in the news
(13:10):
a lot over the last weeksince the bill was signed.
The enacted bill begins work requirements
for Medicaidbeneficiaries age 19 through 64,
and that would go into effectDecember 31st of 2026.
The legislation does allow the Secretaryto exempt states
from compliance with the new requirementsuntil December 31st, 2028
(13:33):
if the state is demonstratinga good-faith effort to comply.
So you do get a window to exerta good-faith effort and still be exempt
from the new requirementswhile you continue to get better.
Those that are subject to the workrequirements must work or engage
in other qualifying activities, sothis includes community service, education
(13:53):
and training programsfor at least 80 hours per month.
The net effect of all of this, perthe CBO, projects
that this will save $325billion over 10 years.
Although work requirementsare the largest single source of Medicaid
savings in the bill, they may not resultin a significant immediate
(14:15):
increase in uncompensated carefor hospitals and health systems,
given that pregnant womenand individuals with disabilities,
among other groups, are exemptfrom those work requirements.
So there's some anxiety with hospitalsand health systems
under the uncompensated care costs,but there's probably some delay,
(14:36):
as well as just less of an impactbased on the excluded parties.
The biggest initial impactof this provision
will likely be on Medicaid managed careorganizations based on their enrollment.
Providers will likely see some decreasesin utilization for ambulatory services
for Medicaid beneficiarieswho have lost coverage.
(14:56):
So it'll be even more importantmoving forward to verify coverage
prior to care delivery,especially for any non-emergency services.
Medicaid eligibility
redeterminationis also a part of the bill.
So, effective for Medicaid coveragerenewals on or after December
31st, 2026, the bill requireseligibility redetermination
(15:20):
at least once every six monthsfor the expansion population,
so in other words,the verification of eligibility
will be on a faster cadence to make surethat folks are still covered for Medicaid.
So the CBO projects this will save about$62 billion over 10 years for those folks
(15:41):
that have stayed on Medicaid longerthan their eligibility would prove.
The nursing facilityminimum staffing requirement
was also referenced in the reconciliationbill.
And specifically, the bill says uponenactment, the bill prohibits
implementation of the minimum staffingrequirements through September 31st, 2034.
(16:03):
The minimum staffingrequirement was put into law back
in April 2024with a future date of implementation.
This basically, it's a death knell
on the staffing ratio or minimumstaffing requirement.
It basically delays it for ten years,which effectively makes it go away.
(16:23):
Now the CBO does project that this willsave $23 billion over those 10 years.
However, that $23 billion was really never
earmarked to fund the staffing ratio.
I think it was more of athought of CMS will have to fund something
to implementa minimum staffing requirement
But nonetheless,that's been a sticky subject
(16:45):
with the nursing facility industryand probably some good news
moving forward that those minimum staffingrequirements are not implemented.
The physician feeschedule is also referenced in the bill.
The bill provides a 2.5% increasein the physician fee schedule conversion
factor for services after January 1st,2026 through December 31st, 2026.
(17:07):
So this is a change from the previousHouse version, which provided
an update of basically 75%
of the Medicare Economic Index
and then 10% of the Medicare EconomicIndex thereafter.
So the CBO does project that this increase
will cost about $2 billion.
(17:28):
So let's talk about the Rural HealthTransformation Fund.
The enacted bill provides a $50 billion
fund over five years to supportrural health transformation.
This is actually an increasefrom the $25 billion fund previously under
consideration, and a change that occurredbefore the bill passed the Senate.
(17:49):
States will need to apply for the funds,
which will be allocated in partbased on each state's rural population,
as well as the proportion of rural healthfacilities located in that state.
It will be up to the statesto determine how the funds are used
and who receives them.
Funds may be used for a varietyof health-related activities, including
(18:09):
chronic disease prevention and management,adopting technology
to improve careand improving payment for services.
There is a
bit of change in the final reconciliationbill,
or One Big Beautiful Bill,that is different from previous versions.
So let's talk a little bit about those.
Medicaid DSH delay was not includedwhile the House version of the bill
(18:31):
delayed the Affordable Care Act's MedicaidDSH cuts until FY 2029;
this delay was removed
from the Senate versionand actually enacted in final legislation.
So unless Congress interveneson this, Medicaid DSH payments will be
reduced by $8 billion in FY 26.
The FMAP reduction for statesthat cover undocumented
(18:54):
individualswas also not included in the final bill.
While the House-passed versionincluded language
that would lower the FMAP from 90 to 80for expansion states
if Medicaid or other state-run programsprovide health coverage
for immigrants who aren't otherwiseeligible for certain public benefits.
The Senate parliamentarian ruledthat this language
(19:14):
was extraneousand it was not included in the final bill.
And finally, whilenot a specific provision of the bill,
the enacted legislation actually increasesthe deficit by $3.4 trillion
and therefore may triggerthe pay-as-you-go mandatory sequester.
And if so, current law requiresa sequester of certain mandatory
(19:37):
spending programsunless Congress steps in to prevent it.
So in the event of a sequester, reductions
to Medicarespending would be limited to 4% annually.
The CBO is the ultimate arbiterof whether the pay-as-you-go kicks in.
Even though the Senate passed
the bill under current policy baseline,meaning for their purposes,
(19:57):
the bill reduces the deficit by $400billion over 10 years.
It's unlikelythe CBO will use current policy baseline.
So that's our summary of the OneBig Beautiful Bill Act
and the implicationson all of our healthcare providers.
If you'd like to learn more abouthow the bill impacts your organization
(20:17):
or how you can respond to changes,
we have a link to a related FORsightsarticle in the show notes.
So let's turn to an update on 340Brebate model litigation.
On June 27th, Federal District Court Judge
Rudolph Contrerasruled that pharmaceutical manufacturers
cannot unilaterally implementa 340B rebate model.
(20:39):
This ruling marks the second timein six weeks that a federal judge
upheld HRSA’s authorityto pre-approve 340B rebate models.
While both rulings sidedwith the government, neither ruled out
the possibility that HRSA could authorizerebates in the future.
Not surprisingly, hoursafter that decision, the plaintiff,
(21:00):
Johnson and Johnson, filed an appealwith the US Court of Appeals for the D.C.
circuit.
Similarly,Eli Lilly, Bristol-Myers, and Novartis
have also appealed that May 15th decision.
Per the 340B report, Johnson & Johnson
met with the OMB staffersand HHS Deputy Director Herzog
to discuss the proposedrebate model under review at OMB.
(21:23):
Johnson &
Johnson noted in the presentationthat the model only applies to two drugs,
and they will pay within 7 to 10 daysupon receipt of verified claims data.
However, this overlooksthe unnecessary administrative burden
this creates for already cash-strappedproviders,
especially given the cutsin the reconciliation bill.
Finally, as we've discussed before, giventhe manufacturers will be the arbiter
(21:48):
of the data necessaryto provide the rebate,
we have some concerns about providersgetting shortchanged.
Finally, let's discuss some key provisionsin the 2026 home health proposed rule.
On June 30th, CMS issued the proposedrule for Home
Health Perspective Payment Systemfor calendar year 2026.
(22:08):
The overall economic impactrelated to the changes in payments
is estimated to be a decrease of $1.135billion,
or -6.4%.
The decrease actually reflectsthe net effect
of the following components.
First is a proposedmarket basket update of a net 2.4%.
(22:31):
So that's a $425 million increase.
There's a proposed permanent adjustmentof roughly -4%
to account for behavior changesrelative to the implementation of PDGM.
So that's effectively a parity adjustmenton what CMS believe
would happen with PDGM versuswhat did happen back in 2020.
(22:55):
So material changes
like changing from a 60-day episodepayment to a 30-day episodic payment.
There's also a proposed 5% adjustment
for what CMS is defining as overpayments.
So this is a temporary adjustmentspecific to calendar year 2026.
The process CMS uses to calculatethe market basket update
(23:17):
in various payment systems, not just homehealth, has some well-understood flaws.
The problem is compoundedby the PDGM budget neutrality adjustment.
And that's putting a further strainon home health providers.
All of the associationsthat represent home care,
both nationally and at the state level,believe that the methodology used
(23:37):
to calculatebudget neutrality is also flawed.
It doesn't accurately account for shiftsin care delivery and utilization under
the new payment system and doesn'taccurately compare hypothetical payments
under the old payment systemto those under PDGM,
and as a result, it continuesto overestimate the difference in overall
(23:58):
spending between the oldand the new payment systems.
If we can even call them old and new,given that PDGM has been around
for five years.
Prior comment letters from associationsrepresenting home health providers
have used data from referral managementplatforms to demonstrate an increase
in patients referred to home healththat were unable to be placed,
(24:20):
and they attribute this to CMS’ budgetneutrality reductions
for home health payments,coupled with increased labor cost.
And there's a managed careimplication on home health as well.
So assuming all of this analysis iscorrect, further cuts will limit access
to home care and possibly createthroughput issues for hospitals.
(24:41):
So this concludes today's WashingtonWatch.
Up next, Chad will be backwith a conversation with Peter Stille
about the tariff landscape and its impacton healthcare organizations.
I'd like to welcome our guest for today'sepisode, Peter Stille,
(25:03):
managing director in the HealthcareConsulting Practice at Forvis Mazars.
Pete leads the practice’s non-labor
cost management services and bringsmore than 30 years of experience
helping healthcare organizationsreduce cost and improve performance.
Pete, thanks for joining us today.
Thanks for having me, Chad.
I'd like to start by asking youto share a bit about the work
(25:25):
you do with healthcare organizationsand generally, what led you to the field?
Yeah, well. Thank you.
I have spent my career
doing non-labor consultingand I lead that practice here.
We help our clients
lift margins in supplies,purchase services and benefits.
(25:48):
All areasthat are not labor or salaries.
And I was always drawn to consulting,I think, because I did want to
make a difference and help clients.
And with non-labor, you know,I think it gave me a challenge
to always learn every day.
(26:08):
There's a lot of different aspectsof non-labor, from paper towels
to spinal implants to employee benefits,and different challenges
to help us find solutionsto help our clients.
And, you know, I had the opportunity,when I started my career
with Anderson in the 90sto work in Fortune 500 organizations.
(26:31):
But I stayed in healthcare
because I really like to seewhat the impact that these solutions
can have for the good of their marginsand their communities.
I just think that meaning waswhat was very satisfying for me.
And, you know, Peter,before we get into our conversation,
one of the things that I've appreciatedabout your approach to this is,
you know, it's one thingto sort of benchmark and figure out
(26:53):
where there are opportunities,but it's a whole different set of issues
to actually gorealize those opportunities.
And what I really enjoy watching
about what you do is the factthat you really do approach it as a change
management challengeand think about it through that lens.
So it's sort of step one,find the opportunity, step
two figure out how to get the organizationto capture those savings
(27:14):
or what the organization can captureand then go after what's realistic.
Yeah, I couldn’t have said better myself.
I never want to be that consultantthat put a fancy book
on the shelves that no one ever reador did anything about.
It was all about the solutionsand measuring what impact
that you had
and that the client could,you know, benefit from.
(27:35):
So, from my perspective,the identification of the solution
and, you know, the brain power to get youthere is really the start of,
what is then the trickier part,to actually get it done.
On the topic of input costs,
one of the concerns on everyone's mindright now is the impact of tariffs.
Obviously, you know,we have the tariffs on China,
(27:59):
Mexico and Canadaas it relates to immigration and fentanyl.
We have the across-the-board 10% tariffs.
We have the reciprocal tariffs
at various rateson various trading partners.
And then we have individual tariffsin certain industries:
aluminum, cars, etc.
(28:20):
We recently in May had a court decision
that found that the reciprocal tariffs,
the tariffs on China, Mexico
and Canada were invalid, that they were
and that they were an overextensionof the president's authority.
(28:42):
And so the ability the president
to implement those tariffshas been questioned by a court.
We've had an appeals courtthat has stayed the injunction.
Really, a long-winded way of sayingthat it's a pretty uncertain environment
in terms of tariffs.
We know they're out there.
They're sort of looming over everybody.
But you know,whether they'll go into effect
(29:02):
and to what extent given to the president,even if they survive legal challenge
is “negotiating”with the various countries.
What questions have you heardfrom the providers you work with
about these tariffs?
Well, Chad firstlet me say I love how you teed that up.
When you said the word uncertain,
(29:24):
that was probably as much workas I heard that word do in a long time,
and it very appropriate, because that isreally what's happening here
is, and the questionsthat we're getting is,
what are we supposed todo with all this uncertainty?
How am I supposed to
forecast what my supply costs are going to be?
(29:45):
What my exposure to supply interruption is going to be?
What can we do about these tariffs
to be able to handle them
and still keep about, pursuing the mission of the organization?
And, on top of all of the things that youmentioned, I did want to add that,
you know,the administration is also giving signals
(30:07):
about the short-term natureof these tariffs that
there are negotiations to be had to makeit all go away, or a lot of it go away.
So there's complexities on complexitieswhen you're looking at that and,
what I'm hearing from clients,they're typically falling
into one of those buckets.
So a lot of
questions right nowlet's break it down a bit.
(30:28):
How can CFOs and other finance leadersat these organizations
gain insight into the full scopeof input items impacted by the tariffs?
Luckily, this is a big enough dealwhere there is a lot
of information out there.
And good information.
(30:48):
We have been watching this closely.
I like some of the analysisthat the budget lab at Yale is doing.
They are analyzing each tariffannouncement.
They’re gaming out what the short-term
and long-term effects are with actuaries.
(31:09):
But they can only take us so far.
And, you know,what are the things they can't,
you know, predict is,what's going to happen tomorrow?
They're really just gaming outwhat it is today.
But when our clients are thinking abouthow to forecast,
how to budget, how to justifythe financials
that they want the blessing ofthe board and the C-suite on,
(31:33):
we see them turning to,
outside resources and see them turningto their existing supply chain partners.
GPOs are publishing what they think are
inflationarythings to account for by category.
Distributors are doing the same,
from looking at alternative products
(31:55):
and sounding the alarmabout suppliers to them
that aren’t playing nicely,
and where they think that there'ssome exposure about being able
to get supplies at the costthat they were paying yesterday.
And the good newsis, we've had some of this practice
with the pandemic a few years ago.
It's just,I think, a little bit broader reach
(32:17):
and a little bitof more uncertainty around it.
And when you do look at these categories,
it's interestingbecause it does break down to
looking at those
categoriesthat are really at the most risk
of impacting your budgetsand, potentially,
(32:38):
your supplies and availability
for a healthcare providerto be able to take care of their patients.
Feeding
tubes, internal tubes,are always exclusively made in China and
those are under significant tariffsright now.
(32:58):
Being able to replace those is
a solution no one's figured out yet.
Personal protective equipment.
This has got, still 50% of the world'sproduction made in China.
And, you know, they, rightnow, actually, before the May 12th
rescinding, most of the tariffs.
(33:20):
So, 245% tariff.
Now it's just 30,but still, you know, 30%
more than it was, a few months ago.
Pharmaceuticals,most of it is made in China.
Even the generics made in Canada,if they take a 10% hit,
that's going to add $51 billion to the USmarket cost for, pharmaceuticals.
(33:41):
Plastics, textiles, imported
steel, even IT has crept up on some of the radars
in terms of, you know,those areas that could be impacted.
One of
the things that I've seen is that it's,
I wouldn't say random,but there is definitely a strategy here
where, and some companiesare better positioned for the short term.
(34:05):
If you are manufacturing medical devicesin Mexico,
and a lot are,those factories are going 24/7 right now.
You can import those devices under,
with 0% tariffs because NAFTA
creates an exemption for themif they're NAFTA compliant.
And actually if you need to importsteel to do it domestically,
(34:29):
there's actually an advantage to doing itin Mexico and not having to pay for that
with the ingredient cost.
So, beyond forecasting,then there gets into the mitigation
strategiesabout working with suppliers have got,
this, this mapped out so they could avoidas much of the burden of this
as is being presentedcurrently in the environment today.
And, you know,
(34:50):
any changes in the supply chainwill have an impact on clinical staff.
What steps can healthcare organizations
take to manage the impact and help staffnavigate these changes?
I think involving them, both in terms of
the decisions that are being madeand getting their input.
(35:11):
I think about it as
part of the teamthat is interdisciplinary,
looking at this data, helpingget that clinical perspective.
You know, for those products
and categories that have exposure
that affect patients’ and nurses’ lives.
(35:32):
What things should they keep in mind
as they're researchingalternatives and timing?
As they look at this,what is their comfort level to stock up
and buy safety stock
to avoid purchasing something at twicethe cost in 90 days.
(35:53):
And they might see, you know,an increased demand, or the fact that
making a conversionof gloves is going to take several months.
So even though that may not beas big of an exposure,
you might want to buymore inventory of that because that
that transition is going to bea little bit more time consuming.
And then also involve them inhow those products
(36:16):
and those solutions are investigated.
Do they need to be a pilot?
Typically, organizations will,you know, carve it up into commodities.
Clinical preferencein high clinical physician preference
to determine what things can goautomatically, what things need a trial,
what things need to be sample reviewed,
(36:38):
and make sure that is includingthe voice of the customer
and the voice of the clinicianso as these changes are thrust upon them.
You know,
back to the earlierpart of the conversation
when we were talkingabout change management,
that's the piece
that organizations really needto make sure that they pay attention to.
You know, beyond just making surethat they can secure things that that are
(36:59):
less impacted by the tariffsbut then also making sure
that the cliniciansare involved in those decisions,
the peoplethat are actually going to be using
the suppliesare brought along for the ride,
and they understandwhy the changes are being made.
They feel like they're being heardas part of that conversation
and ultimately have an opportunityfor some of the more high-use
or high-preference items to kind oftry-before-you-buy, if you will.
(37:20):
That's a really good point you make.
So in that spirit
Chad, I think it's worth emphasizing that,
you know, the communicationhere, beyond those nurses involved,
not only about the strategiesand the involvement of nurses, but
just the anxiety and the facts,
they're being presented to them.
(37:40):
Managing that fear and that uncertaintywell is going to help
reduce the stressof the entire organization and build trust
at a time when tensions are high and,you know, people are working long hours.
I appreciate what you just said.
And I think it's probably worthjust reminding the audience that,
you know,there is still a bit of a hangover
(38:02):
from COVIDand the trauma that everyone went through.
So this needs to be handled carefully,
so as not to exacerbate that experience.
Yeah.
And then last summerthey had the hurricane
come through, and you had IV suppliesthat were,
you know, people were very concernedabout how to take care of patients
(38:23):
and, you know,keep them healthy and be able
to deliver the carethat their patients needed.
So these stresses keep comingand I do think that change management
and attention to that,I think the leading organizations
get right and I think their nursesstick with them longer because of that.
So, Pete,how can providers reconfigure their supply
(38:45):
chains and identifyalternative sources of medical devices
and other suppliesto mitigate the impact of tariffs?
It's a good question.
The good news, and it's challenging.
The good news is that, in healthcarewe've had some practice.
But because of the pandemicand because of some of the shortages
in critical supplies like IV solutions
(39:07):
recently in the southeast.
So essentially the game plan thereand the game plan
today is work with your supply chainpartners, work with
and procure the resources needed to identify where you're exposed.
Evaluate those potential disruptionswell in advance
(39:29):
and then put together a planthat will make sure that you've
got the inventoryto take you through the rough times,
and you've got the timeto evaluate the alternative sources
well in advancebefore it becomes an emergency.
So you know what your options are
(39:49):
and have really expanded the supplier baseand decreased your risk.
And, you know, Peter,we talk about the uncertainty
as being a challenge,
but really to your pointabout exploring options,
I mean, it really is an opportunityto do that.
So it's almost like you've been boughtsome breathing room
in order to make those investigations,make them in a systematic manner.
And then, as you know,we've talked about the change management
(40:13):
piece of it to do the work that you needthere as well.
Yeah.
And that's where I think,you know, the proactive acting
now really helps you get a leg up because
there are some that are watching
and waiting to get more clarityon what there is to do.
But, you know, really, this is just,
(40:34):
you know, good supplychain practice in general.
And when you're handed uncertainty,
in your operationsand your supply chains,
a plan needs to come togetherto help mitigate that risk.
And you can build up safety stock
and try to do itfrom a financial perspective.
But unless you're actively engagingin expanding your supply
(40:58):
chains, helping buy time and
giving you more options, now,
when you know that there's going to haveto be some moves that you need to make
you're going to be better offwhen those times come.
You know, for the moment, pharmaceuticalshave been exempted from tariffs.
However,the president has certainly signaled
(41:19):
that that is in the cardsin a future round.
And in fact, mid-May, the president,or the administration wrapped up
its section 232 investigationinto the national security
implications of pharmaceutical imports,or at least the public comment period
for that wrapped up.
So I think it's safe to saythat we'll be seeing those
(41:40):
in the next couple of months.
How should hospitals and other providers
preparefor pending pharmaceutical tariffs?
You know, there's a lot of concernand rightfully so, on the tariffs so far,
there's kind of been a breath of reliefthat it hasn't included pharmaceuticals.
I think there's been some wishfulthinking that pharmaceuticals may escape.
(42:04):
There's definitely a lot of lobbyingto try to help
make sure that the, like,that likelihood is as high as possible,
because of the essential-nessto the healthcare delivery system.
But it's really a sleepinggiant in terms of impact here.
And, to put in perspective,in the supply chain, if you
(42:27):
put into different categories,pharmaceuticals is the single largest
category.
And tariffs, the impact of tariffshere has a chance to double
the impact in healthcarebecause it is so large.
To address this,you should put plans together,
based on the expectations that you havefor any tariff impacts.
(42:49):
And we see organizationsthat are putting together
conservative, moderate, and aggressiveexpectations of where this is going
in the short-term and a whole other setwhere this is going the long-term.
And they're really assigning
probabilities to that to, you know,figure out what the financial impacts are
and then where their exposure is thebiggest from an operational perspective.
(43:11):
So the same thing should be applied here.
It is just that much more importantto this one singular policy
for this category in the healthcare
supply chain is going to be so important.
You've got a lot of drugs or ingredients that are coming from China.
(43:31):
You have a lot that are coming fromthe European Union.
And I think the right strategy hereis to plan for it now,
the same that you would with others,
and pay particular attentionto this one because it's so large.
And then, when you're
thinking about tariffs in general,from a long-term perspective,
(43:55):
the reciprocal tariffsare probably not sustainable.
But everything that we're seeing isthat the prices are going down.
When you look at the reshoring policiesthat the organization has
to bring operations to the United States,when you're looking at
the direction that we're headed and
(44:19):
that's going to have a major impact.
These are the second largest expensefor healthcare organizations
in their entire expense structure
and it means,
you know, back to your pointabout kind of getting hit on both ends.
You'll be you'll be losingtens of millions of dollars in government
(44:40):
funding for Medicaid reimbursement and
I’ve got a clientthat's modeling this right now
on the tariff side,where there might be very conservatively
right now, $2.5 billion,
with the drugs, it could beit could be double that.
And for the short term,with the reciprocal tariffs,
(45:00):
it could be several times that.
So it's just interesting times.
And unfortunately it's going to requiresome additional investment of resources
to get your arms around this.
Make sure yourorganizations are protected.
Well, and,
you know, whenyou think about the scale of the impact
that we're talking about on both revenueand then on the expense side,
(45:21):
what that suggests to meis that the gap that you may need to fill,
or to find savings for, is big enough
that you can't just look at the impacteditems, be it
pharmaceuticals, at some pointin the future, be it supplies.
So, what are the other areas within thethe non-labor bucket that might present
(45:44):
savings opportunitiesas organizations are trying to offset
these increasing supply costsand the diminished revenue
as a result of anticipatedMedicaid changes.?
The guidance that we're givingand some of the research
that we're seeing is consistent.
That's one, organizations are looking for efficiencies
(46:05):
outside of supplies to offset,those increases.
Your suppliers are doing that.
They're telling in the earnings reportsto investors that they're doing that.
And to some extent, they're able to offsetmost of that, all of that, with
some of the
analyst reports that we've seen to date.
And so that's the good news.
(46:26):
And where does that come from?
Purchased services,where you're really outsourcing labor
and it’s not as supplyintensive, is one example of places
that you cango, we're still seeing good results and
a low change from solutions and,you know,
new approachesin managing employee benefits.
(46:48):
And then looking at theother side of supply chain management
which is utilization,reducing clinical variance,
reducing variance in generaland reducing waste and
looking at getting more control over thoseto make sure that you can
operate as efficiently as possiblewith as little resources
(47:08):
as possible.
And you mentioned the gap in revenue.
And I did want to talk about the factthat the gap,
to the extent that you can't make it up,
your suppliers in healthcare pass it,or are planning to pass it, along to you.
And in other industries,the vast majority of
(47:29):
CEOs are looking at passing those alongto their customers.
In healthcare,the leaders are putting out letters,
trying to get clarification
and communicating and collaboratingbecause there is still,
and I was surprised to see,but happy to see that organizations are,
very commonly, reaching out to suppliersand proactively negotiating,
(47:53):
with them to make sure that
they have a relationship
and a structure that can be successfulduring some trying times.
Asking their suppliersto provide documentation
if there is that need to,you know, revisit where the costs are.
And that gap that you mentioned, Chad,and that documentation
(48:16):
that we should be asking of our suppliersis the same documentation,
the same facts that we can bring to managed care payors
to, you know,show them what the facts are,
from the hospital’s perspective
in this whole headache that's being,you know, thrown at us as far as tariffs.
Yeah. No, that's absolutely right.
(48:37):
And I think as you and I have talkedabout this before, I think one thing
to flag for our listeners as well is,you know,
in 2025, I'm still occasionally surprisedat the percentage
of percent-of-charge contractsthat many providers still have.
And so obviously,make sure that as these price increases
roll through, that your chargemaster is upto date, so that way where you've got
(48:59):
those percent-of-charge contracts,you can benefit from that as well.
And certainlythen on your fixed contracts,
your DRG-based contracts,that also helps you with your outliers.
So just a lot of pieces to think throughand make sure that you're tracking.
And Chad, one of the things thatis one of the first steps we
advise
(49:19):
our clients on the cost sideis to review their contracts
for price protections and the, you know,are you protected?
To some extent,but not as much as you'd like to be.
And so that review can really,you know, give you a sense for
where you're at, where you're exposed
and really the conversationsyou need to have with your suppliers,
(49:43):
and the controls that need to be put in place
and efficienciesthat you need to start to target.
And I think that's great advice.
As we look to wrap up,you know, we've had a great discussion.
You shared a lot of fantastic insights.
What's one piece of adviceyou would give to a CFO or a supply chain
(50:04):
executive as they navigate the tariffsand the uncertainty surrounding them?
I don't know if this is one piece, Chad,but I would advise: don't wait.
Act now.
And I think CFOswill love this: spend more.
I think that
these are the thingsthat many organizations are doing anyway.
(50:27):
And these tariffs,these losses of government funding
that are on the horizon.
And, you know, in recenttimes, the pandemic and other challenges
have shown us just how much more we need to do
to invest in making sure that we have cost structures that can support
(50:48):
not only where we are today,but the future challenges as well.
Pete, thank you again for joining me todayand sharing your insights.
Always great to talk to you.
And also thank you again to Andy Pagefor covering today's Washington Watch.
And I want to thank our listenersfor their time and tuning in.
If you'd like to learn moreabout navigating the impact of tariffs,
we have links to some of ourrelated articles in the show notes.
(51:12):
I hope you'll join me on August 6thfor the next episode of Achieving Health.
Till then, hope everybody stays well.
You can follow
Achieving Healthon your favorite podcast platform or visit
forvismazars.us/AchievingHealthPodcastto learn more.
New episodes are released the firstand third Wednesday of each month.
(51:35):
Achieving Health is producedby Forvis Mazars LLP, an independent
member of Forvis Mazars Global, aleading global professional services
network, ranked among the largest publicaccounting firms in the United States.
The firm's 7,000 dedicated team membersprovide an Unmatched Client Experience
through the delivery of assurance, tax,and consulting services for clients
(51:57):
in all 50 states and internationallythrough the Global Network.
The information set forth in this podcastcontains the analysis and conclusions
of the panelistsbased upon his, her or their research
and analysis of industryinformation and legal authorities.
Such analysis and conclusionsshould not be deemed opinions
or conclusions by Forvis Mazarsor the panelists
(52:20):
as to any individual situationas situations are fact-specific.
The listener should performtheir own analysis and form
their own conclusionsregarding any specific situation.
Further, the panelists conclusionsmay be revised without notice,
with or without changes in industryinformation and legal authorities.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.