Set hospital global budgets

Months 6–18; annual negotiation thereafter · UHA regional offices; Payment Rates BoardDiscuss this step

Every existing law, program, institution, or practice this step changes: what it is today, what happens to it, when, and what that costs or trades off.

What	Today	Change	Trade-off
Nonprofit hospital tax exemption & charity care rules (IRC §501(r)) amendedYear 4 Federal tax code	Nonprofit hospitals are exempt from income and property taxes in exchange for 'community benefit', much of it counted as charity care and Medicaid shortfall.	Charity care for covered services disappears; community-benefit standard redefined around public-health investment, or exemption reconsidered by Congress.	The main rationale for the exemption (uncompensated care) disappears; ending exemptions would raise revenue but cut hospital margins.
Medicare hospital payment systems (IPPS DRGs, OPPS) replacedYears 1–4 (converging) Provider payment & regulation	Per-case and per-service rates for Medicare; commercial insurers pay negotiated prices about 2.5x Medicare.	Replaced by global operating budgets at about 120% of Medicare-equivalent volume; DRGs retained as a measurement tool and for out-of-region patients.	Spending control and less billing vs. weaker volume incentives.
Medicaid & Medicare DSH and supplemental payments replacedYear 4 Provider payment & regulation	Billions in disproportionate-share and supplemental payments compensate hospitals for uninsured and Medicaid patients.	End; the need disappears and the money is built into global budgets (safety-net adjustment).	Simpler, but safety-net hospitals depend on budget-setting getting their adjustment right.
Critical Access Hospitals (cost-based reimbursement) replacedYears 1–4 Provider payment & regulation	About 1,370 small rural hospitals are paid 101% of reasonable cost by Medicare instead of prospective rates.	Become a protected category in global budgets: budgets set from audited costs plus a margin, with a floor so isolated hospitals cannot be squeezed out.	Protects rural access; cost-based budgets reward high costs and weaken efficiency incentives.
Hospital uncompensated care and charity care policies endsYear 4 Provider payment & regulation	Hospitals provide tens of billions of dollars a year in charity care and absorb bad debt.	Charity care and bad debt for covered services disappear; hospital financial-assistance policies apply only to non-covered items.	Hospitals stop absorbing these losses; the community-benefit justification for tax exemption weakens.
Medicare hospital cost reports expandedYear 0 Provider payment & regulation	Annual cost reports, used mainly for Medicare policy, are often unreliable.	Audited, standardized cost reports become the basis of every hospital's global budget.	Better data for fair budgets; heavier audit burden for hospitals.
Medicare pay-for-performance programs (MIPS, Hospital Value-Based Purchasing, readmission penalties) replacedYear 1 Provider payment & regulation	Small bonuses and penalties with heavy reporting burden and mixed evidence of benefit.	MIPS ends. Hospital programs are replaced by a single 2% quality withhold in global budgets. (The Medicare for All Act ends pay-for-performance entirely; this plan keeps one simple version.)	Far less reporting; a quality incentive remains but can penalize hospitals serving sicker, poorer patients.