Medicaid DSH cuts: CMS urged to release 97th percentile hospital list ASAP

America's Essential Hospitals has called on CMS to release the list of hospitals serving the highest percentage of low-income patients so those facilities are aware of their exception from the agency's final rule that will cut Medicaid disproportionate share hospital payments by $32 billion over the next four fiscal years. 

The final rule, published Feb. 21, will reduce Medicaid DSH payments by $8 billion a year. The cuts begin in fiscal year 2024 — which began Oct. 1, 2023 — and run through 2027.

The legislation does not apply to safety-net hospitals serving the highest percentage of low-income patients. CMS said that hospitals in and above the 97th percentile of inpatient days comprising patients who are entitled to Medicare Part A benefits and Supplemental Security Income benefits are exempt. 

"We call on CMS to release the 97th percentile lists for 2022, 2023 and 2024 as soon as possible," Julie Kozminski, policy manager for America's Essential Hospitals, said in a statement shared with Becker's. "Our members need to know their exception status and potential liability for repayments — any further delay will hamper their ability to plan for and deliver patient care."

America's Essential Hospitals said that it is also disappointed that CMS did not include all hospitals in the calculation, "only those that submit cost reports, which will lower the number that qualify for the exception."

The American Hospital Association has also voiced its concern about the effect that DSH cuts will have on hospital finances.

"This policy was based in-part on the flawed notion that hospitals receive the entirety of a Medicare or Medicaid payment rate when in reality most state Medicaid programs pay less than that," Ben Finder, AHA's vice president of coverage policy, said in a statement provided to Becker's. "That means that many hospitals are not compensated fully for care provided to patients dually eligible for Medicare and Medicaid and this policy would reduce their ability to offset those cuts and potentially create additional financial strain at a time when many hospitals are already struggling."

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