DOA withholds $8M in Medicaid reimbursements amid urgent hospital budget discussions

The 38th Guam Legislature convened on May 5, 2025, for a critical budget hearing focused on the fiscal year 2026 budget. The discussions highlighted significant financial challenges facing the Department of Administration (DOA) and the Guam Memorial Hospital (GMH), particularly concerning Medicaid reimbursements and personnel costs.

A key point of contention was the DOA's withholding of approximately $7 to $8 million in Medicaid advances, which has resulted in GMH receiving only half of its expected reimbursements. This financial strain has raised urgent concerns about the hospital's ability to meet operational costs, especially as private insurance fails to cover the full expenses of patient care. The hospital's representatives expressed frustration over the disconnect between the DOA, the governor's office, and the hospital's urgent financial needs, emphasizing that the situation has reached a critical point.

The hearing also addressed the rising personnel expenses, which are not limited to medical staff but extend to non-medical roles as well. The hospital's representatives noted that they are struggling to meet obligations for health and dental insurance, as well as withholding taxes, with a shortfall of approximately $800,000 to $900,000 each payday. The potential increase in retirement rates from 31% to 34% could exacerbate these financial challenges, with estimates suggesting an additional $3 million in costs.

Another significant topic was the disparity between GMH's budget request of $21.9 million and the governor's proposed budget. The governor's office submitted its budget earlier in the year, leading to a lack of alignment with the hospital's current financial needs. The hospital's representatives pointed out that the governor's budget reflects a decrease in funding, which does not account for the rising costs of healthcare and the need for organic growth in services.

The hearing also touched on the hospital's capital improvement projects (CIP), with a request of $29.3 million. However, there are concerns regarding the eligibility of certain projects for hazard mitigation grants, which could impact the hospital's ability to secure necessary funding for infrastructure improvements.

In conclusion, the budget hearing underscored the urgent financial challenges facing Guam's healthcare system, particularly the GMH. The discussions revealed a pressing need for better coordination between the DOA and the hospital to address funding shortfalls and ensure that healthcare services can be maintained. As the legislature moves forward, the implications of these budgetary decisions will be critical for the health and well-being of the community.