Hospitals prepare for looming Medicaid DSH cuts

Rural and safety-net hospitals across the country are facing decisions about how to manage $4 billion in federal cuts to Medicaid Disproportionate Share Hospital payments that are slated to begin next month, according to Stateline.

The cuts, which will begin Nov. 22 without congressional action, are part of the Medicaid DSH program, under which hospitals that serve a disproportionate share of low-income patients receive payments to help cover the costs of caring for them. Assuming uncompensated care costs would decline as the number of insured people increased, the ACA lowered the payments to hospitals. But a U.S. Supreme Court ruling that gave states the option to expand Medicaid has kept more people from becoming insured.

CMS issued a final rule in 2013 to implement cuts to DSH funding, but lawmakers have repeatedly delayed the federally required cuts.

Most recently, Congress approved delaying the beginning of $4 billion in planned fiscal year 2020 cuts to Medicaid DSH payments from Oct. 1 to Nov. 22.

CMS already issued a final rule Sept. 23 detailing how the $4 billion in cuts, as well as $8 billion in cuts to Medicaid DSH payments each fiscal year from 2021 to 2025, would be implemented.

Rural and safety-net hospitals will lose the $4 billion unless Congress acts over the next several weeks, prompting them to express concerns about the looming cut, according to Stateline, an initiative of The Pew Charitable Trusts that offers reporting and analysis.

Dallas-based Parkland Health and Hospital System, which would lose $22 million in federal money this year if the $4 billion cut is implemented, would likely curb expansion of services into more poor communities in the Dallas area, Katherine Yoder, vice president for government relations, said, according to the report.

Patrick Cawley, MD, CEO of the Medical University of South Carolina health system in Charleston, told Stateline the system "began talking about what we're going to stop doing" in terms of healthcare services if the cuts happen.

Meanwhile, the House Energy and Commerce Committee has approved a plan to repeal the $4 billion in cuts in fiscal 2020 and $8 billion in cuts in fiscal 2021, as well as reduce the cut in fiscal 2022 from $8 billion to $4 billion. A repeal of the cuts would still require full House and Senate approval.   


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