The Center on Budget and Policy Priorities has released a brief examining the impact on providers of converting Medicaid into a block grant program, as U.S. Rep. Paul Ryan's (R-WI) deficit reduction proposal would do.  The brief suggests that converting Medicaid into a block grant program would result in lower provider reimbursements.  Additionally, the authors project that states would restrict Medicaid eligibility standards to reduce costs, resulting in increased provider spending to provide uncompensated care. 

From the report:

To compensate for the very large federal Medicaid funding cuts under the block grant the Ryan budget plan includes, states would likely reduce provider payment rates substantially over time. States likely also would scale back eligibility and cap enrollment for certain populations. As a result, providers such as hospitals and community health centers would experience a large surge in the volume of uncompensated care they provide. Other providers, such as pharmacists and managed care plans, would have fewer clients with the means to pay for services, which would decrease their revenues and could, in some cases, threaten their long-term viability. Finally, the Ryan plan would repeal the Affordable Care Act’s expansion of Medicaid coverage, causing millions of Americans with limited incomes to continue to lack the means to pay for needed health services.

Full report: Health Care Providers Would Face Deep Cuts in Payments and Higher Uncompensated Care Costs Under Medicaid Block Grant (PDF | 197.43)

Center on Budget and Policy Priorities.  (2011).  Health care providers would face deep cuts in payments and higher uncompensated care costs under Medicaid block grant.  Cross-Call, J.