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Hospitals warn HR 1 will reduce supplemental Medicaid payments and increase uncompensated care; rural grant gives temporary relief
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Summary
Hospital leaders and UMC’s CEO told lawmakers that HR 1’s limits on provider taxes and supplemental payments will reduce funds hospitals used for higher reimbursements and community programs. Nevada’s rural health transformation grant provides one‑time funds for upgrades and workforce initiatives, but hospital leaders warned of likely service cuts, deferred capital spending and higher uncompensated care without additional state action.
Hospital leaders briefed the committee on how HR 1 will affect hospital finances and operations across Nevada.
Blaine Osborne (Nevada Rural Hospital Partners) said critical‑access hospitals rely in part on provider‑tax supplements; six of the state’s critical‑access hospitals participate in the private hospital provider fee program and receive a net benefit estimated at roughly $22 million annually. He framed the state’s rural health transformation (RHT) grant as helpful for modernization and start‑up costs, but not as a full replacement for recurring supplemental revenues.
Patrick Kelly (Nevada Hospital Association) and Mason Van Howling (CEO, University Medical Center) presented macro and hospital‑level impacts. Kelly emphasized that supplemental payments, not base rates, have driven recent improvements in hospital revenue and that HR 1’s cap on such payments could remove hundreds of millions over the phased implementation. Van Howling used UMC as a case study: supplemental payments represented roughly $261 million of UMC’s patient revenue year‑to‑date; a phased reduction beginning in 2028 could reduce UMC’s operating margins by tens of millions annually if projected cuts materialize.
Hospital leaders said consequences would likely include increased ER use and longer waits, higher uncompensated care, deferred equipment purchases and possible service reductions — especially in lower‑volume specialties such as certain behavioral‑health and maternal services. They also noted changes in retroactive Medicaid coverage windows (shorter retro eligibility timelines for some groups) could affect a hospital’s ability to obtain reimbursement for care provided to patients who later qualify.
On the positive side, the Health Authority’s rural health transformation grant (about $179.9M over five years) includes sizable allocations: workforce recruitment and retention, technology and capital support, and a Rural Health Flex Fund. Osborne and Melinda Southard (NHA deputy director) said RFAs and RFPs for these funds are opening in May with awards expected in summer 2026 and that projects must include sustainability plans and local partnership agreements.
Why it matters: HR 1’s provider‑tax and supplemental‑payment limits could diminish a large, non‑general‑fund revenue source hospitals used to support higher reimbursements and community investments. Rural hospitals with thin margins say RHT grant awards can help adapt infrastructure and workforce but will not permanently replace recurring supplemental revenue.
Next steps: Hospitals and state officials urged continued monitoring, scenario modeling once CMS issues guidance, and legislative consideration of options to mitigate coverage gaps and provider revenue shortfalls.
