Hospitals urge Congress to scrap $8B in cuts as shutdown looms

More than 250 hospitals and health systems are urging Congress to halt the $8 billion reduction to Medicaid disproportionate share hospital funding, set to begin Oct. 1.

The funding cuts, part of the Affordable Care Act, will curb Medicaid DSH funding by $8 billion in fiscal years 2024 through 2027 — a $32 billion reduction total. In their Sept. 14 appeal to Congress, safety-net hospitals urged lawmakers to "eliminate, at a minimum" the $16 billion in cuts scheduled for fiscal years 2024 and 2025. 

The Medicaid DSH program, established in the 1980s, provides financial support to hospitals that serve a significantly disproportionate number of low-income patients and the under- and uninsured.

"The need for DSH funding is even greater now, as hospital expenses per patient have increased significantly since the pandemic," the hospitals, represented by the association America's Essential Hospitals, wrote to Congress. They said ongoing high levels of uncompensated care nationwide make Medicaid DSH cuts indefensible.

The American Hospital Association has noted, in separate communication, that the scheduled cuts would coincide with a "difficult transition" for the Medicaid program, as states are reviewing eligibility and disenrolling people who no longer qualify for Medicaid after the COVID-19 public health emergency ended in May. 

The ACA included Medicaid DSH cuts under the reasoning that hospitals would care for fewer uninsured patients as health insurance coverage expanded. Congress has previously staved off the cuts 11 times, in bipartisan fashion. 

Hospitals' appeal comes as Congress hurries to wrap up its appropriations process and pass a funding bill by Sept. 30. Inability to pass a funding bill could result in a partial or complete shutdown of the federal agency and services and risk programs due to end at the end of the fiscal year without Congressional action. The House of Representatives is preparing for a Republican-led continuing resolution — a stopgap bill that would extend the funding deadline by one month — that is unlikely to proceed in the Democrat-controlled Senate. 

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