102 Safety-Net Hospital CEOs: DSH Cuts Will Lead to Layoffs, Financial Hardship

Cuts to Medicaid disproportionate share hospital payments are reaching a crescendo, as safety-net healthcare leaders have taken their views to Congress.

In a letter to Max Baucus (D-Mont.), Orrin Hatch (R-Utah), Fred Upton (R-Mich.) and Henry Waxman (D-Calif.), 102 leaders of more than 250 safety-net hospitals and health systems urged Congress to stop reductions in Medicaid DSH payments immediately. Leaders who signed the letter included Carlos Migoya, president and CEO of Jackson Health System in Miami, Nancy Schlichting, CEO of Henry Ford Health System in Detroit, the CEOs of each University of California Health medical center and many other major system executives.

Under the Patient Protection and Affordable Care Act, Medicaid DSH payments to hospitals will be cut by $18.1 billion from fiscal year 2014 to FY 2020. Medicaid DSH payments go to safety-net hospitals and health systems that treat high volumes of low-income populations. The Medicaid DSH cuts were put into the law because Medicaid expansion and the health insurance exchanges are expected to reduce uncompensated care levels at hospitals.

In September, CMS issued a final rule outlining Medicaid DSH cuts this year and in 2015. Hospitals will lose $500 million this year and $600 million the year after.

Sen. Roger Wicker (R-Miss.) and Rep. John Lewis (D-Ga.) have each introduced bills to delay Medicaid DSH cuts for two years. The American Hospital Association and other major hospital lobbying groups have voiced support for the legislation and have similarly demanded Congress halt DSH cuts.

In the hospital leaders' letter, they said the deterioration of Medicaid DSH payments will directly lead to financial hardship, layoffs and reduced services at their organizations.

"Cuts to Medicaid DSH have recently taken effect, reducing federal support for our hospitals by $500 million this year. These cuts will get much larger in the coming years if you do not act now," the executives wrote. "If these crippling cuts are not stopped, our hospitals will be forced to curtail essential services, ultimately limiting access to care and cutting jobs. There is no connection between the cuts and the number of uninsured or amount of uncompensated care across the country. The level of Medicaid DSH cuts simply cannot be justified."

Analysts at Fitch Ratings and Moody's Investors Service have said DSH reductions will hurt the credit profiles of nonprofit hospitals and health systems, especially those in states that are not expanding Medicaid.

More Articles on Medicaid DSH Cuts:
4 Disproportionate Share Hospital Survival Strategies From UW Medicine
Hospital Groups Urge Senators to Pass Legislation Delaying DSH Cuts
CMS Issues Final Rule Cutting $1.1B in Medicaid DSH Payments

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