Medicare should increase, not decrease, Medicare disproportionate share payments (Medicare DSH) in FY 2024, ASH has written to the Centers for Medicare & Medicaid Services in response to that agency’s proposal to cut its Medicare DSH uncompensated care pool by $160 million next year.

Addressing the proposed Medicare DSH cut in its response to CMS’s proposed FY 2024 inpatient prospective payment system rule, ASH wrote that

ASH recognizes that the size of the Medicare disproportionate share Medicare DSH) uncompensated care pool is calculated based on a formula established by Congress and not one developed by CMS.  Still, we cannot help but be disappointed to find that at the same time the federal government has so publicly focused greater attention and energy on addressing health equity challenges – including in this proposed rule – it also has proposed a cut of approximately $160 million in the Medicare DSH uncompensated care pool. 

A cut of this size can only detract from the administration’s health equity efforts because it would, without question, hit hardest the same community safety-net hospitals – including ASH hospitals – that serve the most patients who are challenged by social determinants of health and the most patients who have suffered, and who continue to suffer, from inequitable access to care.  The federal government should not reach out to a specific population with one hand while taking resources away from it with the other.  To the contrary, it should be consistent, and in this case that consistency, that walking the talk, means not taking much-needed resources away from the very hospitals that serve a population the administration has so publicly and repeatedly and, we believe, appropriately, declared its intention to serve more effectively and with greater equity. 

For these reasons, ASH opposes the proposed $160 million cut in Medicare DSH uncompensated care funds.  If anything, we believe this pool should be larger, not smaller, to meet the needs of community safety-net hospitals and others that expect to continue serving large numbers of uninsured and underinsured patients.  This is especially true in the coming year, with the unwinding of continuous Medicaid eligibility that characterized the recently ended public health emergency and amid the expectation that somewhere between five million and 14 million Americans will lose their eligibility for Medicaid in the coming months.  While the proposed regulation at issue today addresses Medicare, CMS, as the implementation arm of so much federal health care policy, needs to be mindful of the whole picture, not just an isolated part of it, even in a proposed Medicare regulation that does not explicitly address Medicaid.  Policymakers should not, in our view, be unmindful of the Medicaid changes now under way because if hospitals continue to find their financial health jeopardized by this confluence of circumstances – inflation, inadequate Medicare payments, loss of Medicaid coverage – more hospitals will falter and possibly even close, jeopardizing access to care for everyone, regardless of their insurance status.  Again, ASH recognizes that the proposed cut is based on a formula established by Congress and not one developed by CMS, but we urge CMS to work within existing parameters to find a better approach to dealing with a decision that has significant implications for safety-net hospitals across the country.

Finally, ASH urges CMS to review the manner in which it calculated the Medicare DSH uncompensated care pool.  Specifically, one of the components of that calculation, Factor 2, is determined by comparing estimates of the number of people projected to be uninsured in FY 2024 to the number of uninsured in calendar year 2013, before the Affordable Care Act took effect.  The calculation for FY 2024 suggests that the uninsured portion of the population in FY 2024 will be the same as in FY 2023:  9.2 percent.  ASH believes the FY 2024 figure could increase, however, and potentially increase significantly, because states may now disenroll individuals from their Medicaid rolls now that the continuous eligibility under the COVID-19 public health emergency has ended and it seems likely that many such disenrolled individuals may not be able to afford replacement insurance.  For this reason, we urge CMS to update Factor 2 with more timely and accurate data to reflect this likely increase in the FY 2024 uninsured rate and then recalculate the Medicare DSH uncompensated care pool to reflect this more timely and accurate data.

Read ASH’s entire letter here.