Closing the Coverage Gap

1.1 The Policy Environment: OBBBA Medicaid Cuts

The legislation achieves these reductions through four primary mechanisms:

• Work Requirements: Adults aged 19–64 in the Medicaid expansion group must complete 80 hours of work or qualifying community engagement per month — an estimated $326 billion in federal spending reductions over 10 years due to disenrollment (Urban Institute, 2025).²
• Increased Administrative Burdens: Reversal of simplified enrollment processes ($122 billion in projected cuts), combined with more frequent eligibility redeterminations ($63 billion) (Eleos Health, 2025).¹
• Provider Tax Restrictions: A moratorium on provider tax increases — a mechanism states use to fund Medicaid — projected to cut $191 billion in federal spending (Eleos Health, 2025).¹
• State-Directed Payment Limits: Revisions to caps on directed payments, particularly to psychiatric facilities, projected to reduce federal matching payments by $149 billion (Eleos Health, 2025).¹

The CBO projects that by 2034, more than 11.8 million Americans will become uninsured as a direct result of OBBBA (AMA, 2025).³ For behavioral health, the impact is amplified: behavioral health reimbursement rates are already 22% lower than medical and surgical rates, and Medicaid finances approximately one-quarter of all behavioral health services in the United States (Eleos Health, 2025).¹

Impact on North Carolina behavioral health facilities: North Carolina’s behavioral health infrastructure was already strained before OBBBA. As of September 2025, the state had 3,403 licensed behavioral health beds statewide, with approximately 300 offline each day due to staffing shortages (Becker’s Behavioral Health, 2026).⁴ Annual admissions to the state’s three public psychiatric hospitals fell 73% — from 3,210 to 875 — between FY2013 and FY2025, even as demand for inpatient mental healthcare continued to rise (NC Health News, 2026).⁵

The University of North Carolina reports that nearly 4 million people — approximately 2 in 5 North Carolinians — live in a mental health professional shortage area, and more than 50% of children with mental health needs cannot access appropriate care (Carolina Across 100, 2023).⁶ With OBBBA reductions now law, freestanding psychiatric hospitals in North Carolina face disproportionate strain: they depend heavily on Medicaid reimbursement and lack the diversified revenue streams of general acute care hospitals.

1.2 Rising Provider Compensation: The Cost Side of the Squeeze

Even as revenues contract, behavioral health facilities face compounding pressure from rising clinician compensation. Hospitalist medicine — the physician specialty most relevant to inpatient psychiatric facility coverage — has seen consistent wage escalation over the past five years. According to Today’s Hospitalist 2024 Survey, mean compensation for all hospitalists reached $348,231 in 2024 — a 2.6% increase over the prior year (a roughly $18,000 year-over-year increase). Nonacademic adult hospitalists reported average compensation of $355,307, while local hospitalist group physicians averaged $380,431 (Today’s Hospitalist, 2025).⁷ The Doximity 2025 Physician Compensation Report placed median total hospitalist compensation at $326,116, and SalaryDr’s April 2026 verified data placed the median at $345,000.⁸

Figure 3: Hospitalist Annual Compensation Benchmarks (2024–2026). Sources: Today’s Hospitalist, Doximity, SalaryDr.

Beyond physician compensation, behavioral health facilities carry substantial non-physician staffing costs. The OPEN MINDS 2023 industry survey reported an average turnover rate of 27.5% for behavioral health facility support employees in 2023, down from 31.28% in 2022.⁹ Ohio’s behavioral health workforce analysis reported that workforce compensation rates rose more than 10% in 2024, with agencies experiencing an average 41% workforce turnover (Ohio Behavioral Health Consortium, 2025).¹¹ The financial consequence is significant: turnover costs include recruitment, onboarding, temporary coverage, and training — expenses that accrue regardless of patient census. When a facility employs or contract-staffs physicians directly, it also absorbs the full cost of benefits, malpractice insurance, continuing education, and scheduling gaps. This fixed-cost structure becomes financially untenable when reimbursement rates decline.

Figure 4: Behavioral Health Staff Turnover Rate Trend (2021–2024). Sources: OPEN MINDS (2023); Ohio BH Consortium (2025).

1.3 Readmission Penalties: A Measurable and Preventable Cost

CMS’s Hospital Readmissions Reduction Program (HRRP) penalizes hospitals with excess 30-day risk-standardized readmissions, applying reimbursement reductions of up to 3% of all Medicare inpatient payments. For psychiatric facilities specifically, CMS tracks the 30-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization measure within the Inpatient Psychiatric Facility Quality Reporting (IPFQR) program.¹²

According to CMS preliminary data released in September 2025, 240 hospitals (8.1%) are expected to face readmission penalties of 1% or more in FY2026 — the first increase in the number of hospitals facing such penalties in five years (Advisory Board, 2025).¹³ The average 30-day all-cause psychiatric readmission rate is approximately 20%, representing a substantial and measurable financial liability for facilities that lack active medical management of inpatient populations. The clinical rationale is well-documented: patients with behavioral health diagnoses have higher rates of medical comorbidity, and when those comorbidities are not actively managed during inpatient stays, they become drivers of readmission. Psychiatric patients who are readmitted within 30 days generate no additional net reimbursement — only costs.

Figure 5: Annual CMS Readmission Penalty Exposure by Rate (FY2026). Source: CMS HRRP; Advisory Board (2025).

1.4 Medical Comorbidities: The Clinical Root of Financial Risk

Approximately 50% of all psychiatric inpatients have active medical comorbidities — conditions such as diabetes, cardiovascular disease, hypertension, and respiratory illness that require ongoing medical management during a psychiatric hospitalization.¹⁴ This clinical reality has direct financial implications:

• Length of Stay Extension: Research published in Psychiatric Services found that when medical comorbidity was a focus of care during psychiatric hospitalization, length of stay was prolonged by an average of 3.25 days (Dewa et al., 2002).¹⁵ Extended stays increase the probability of falling outside reimbursement windows.
• Readmission Rate Doubling: Patients with unmanaged comorbidities have been shown to carry approximately double the 30-day readmission rate of patients without active medical complications, based on a consistent body of inpatient outcomes literature.¹⁴
• Complication Risk: Psychiatric patients who develop medical complications during hospitalization — due to medication interactions, undetected infections, or unmanaged chronic conditions — face extended stays, potential transfer costs, and adverse outcomes that compromise quality metrics and Joint Commission standing.

Most behavioral health facilities, particularly freestanding psychiatric hospitals, do not employ or retain dedicated internal medicine or hospitalist coverage. Psychiatrists are trained to manage psychiatric conditions; they are not positioned to perform History and Physical (H&P) exams on admission, manage medication regimens for complex medical conditions, or provide the level of medical oversight that Joint Commission standards require. This gap — the coverage gap — is the precise problem The Moore Medical Group exists to close.

4.1 Joint Commission Standards for Inpatient Psychiatric Facilities

Key Joint Commission focus areas for psychiatric hospitals include:

• History and Physical (H&P) Requirements: CMS and Joint Commission standards require that an H&P be completed within 24 hours of admission for all inpatients. In behavioral health facilities without dedicated medical coverage, this requirement is frequently managed through workarounds — including psychiatrist-completed H&Ps that lack the medical depth required for patients with complex comorbidities.
• Medication Management and Antimicrobial Stewardship: Joint Commission standards require documented medication reconciliation, antimicrobial stewardship protocols, and management of high-alert medications. Psychiatric inpatients frequently present on complex medication regimens requiring medical oversight.
• National Patient Safety Goals (NPSGs): The Joint Commission’s NPSGs — including correct patient identification, medication safety, and infection prevention — apply to psychiatric hospitals. Compliance requires consistent physician involvement in safety protocols.
• Environment of Care: Standards governing ligature risk, safety design, and physical environment require facility-level compliance programs that intersect with clinical quality management.

MMG’s compliance prong is designed to ensure that facilities maintain Joint Commission readiness at all times — not as a preparation event before a survey, but as a continuous operational standard.

4.2 CMS Inpatient Psychiatric Facility Quality Reporting (IPFQR)

CMS requires all IPFs that receive Medicare payments to report quality data under the IPFQR program. Facilities that fail to report required quality data receive a 2-percentage-point reduction applied to their annual payment rates — a direct and avoidable financial penalty.¹²

The IPFQR program tracks measures including:

• 30-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization
• 30-Day Risk-Standardized All-Cause Emergency Department Visit Following an IPF Discharge
• Medication-Related measures for high-risk patient populations
• Timely Transmission of Transition Record measures

Active medical management — including H&Ps, daily rounding, medication management, and discharge planning support — directly influences performance on these measures. MMG’s clinical model is specifically structured to support strong IPFQR performance, which in turn protects the facility’s full payment rate.

For FY2026, CMS also extended reporting period requirements for the readmission and ED visit measures to two-year windows — providing facilities additional time to demonstrate sustained improvement.

4.3 MMG University: Continuous Education as a Quality Investment

MMG University is the organization’s proprietary continuing education platform for facility staff. Continuing education in behavioral health settings serves multiple operational functions: it maintains licensure compliance for nursing and clinical staff, builds facility-level competency in medical comorbidity recognition, and supports the behavioral safety culture that Joint Commission standards expect.

Turnover in behavioral health settings — at an industry average of 27–31% annually¹⁰ — means that any given facility continuously onboards new clinical staff. MMG University provides a structured mechanism for maintaining care quality standards across staff transitions, reducing the knowledge gap that contributes to preventable adverse events and readmissions.