Bill Would Overhaul Medicaid DSH

A new Senate proposal would change how the federal government allocates Medicaid disproportionate share money (Medicaid DSH) to the states.

The State Accountability, Flexibility, and Equity (SAFE) for Hospitals Act, introduced by Senator Marco Rubio (R-FL), seeks to

…create equity for all states by updating a metric used to determine how much each state is allotted, which has not been reformed since the early 1990s.

A news release issued by Senator Rubio explains that the bill

  • Gradually changes the DSH allocation formula so states’ allocations are based on the number of low-income earners living in the state, as a percentage, of the total U.S. population earning less than 100% of the Federal Poverty Level (FPL).
  • Prioritizes DSH funding to hospitals providing the most care to vulnerable patients, while providing states with the necessary flexibility to address the unique needs of hospitals in each state.
  • Expands the definition of uncompensated care to include costs incurred by hospitals to provide certain outpatient physician and clinical services, which is a change recommended by MACPAC.
  • Allows states to reserve some of their DSH funding allocations to be used in future years in order to give hospitals more certainty or consistency in the amount of DSH funding they can expect when planning for the future.

The news release also explains that one of the purposes of the bill is to benefit Florida.

NAUH will monitor the bill’s progress closely, evaluate its potential impact on private safety-net hospitals, and respond appropriately, if needed.

Learn more about the new Medicaid DSH bill by reading the news release and this one-page summary of the bill.

MACPAC Looks at Medicaid DSH

Last week the Medicaid and CHIP Payment and Access Commission met in Washington, D.C. and one of the subjects on its agenda was Medicaid DSH.

The Affordable Care Act mandated major reductions of Medicaid disproportionate share (Medicaid DSH) allotments to states and those reductions have been delayed by Congress several times but are now scheduled to begin in FY 2020.

At the MACPAC meeting the commission’s staff presented three proposed recommendations that address Medicaid DSH allotments; these recommendations were based on a consensus reached by MACPAC commissioners at their October meeting.  Those recommendations are:

  1. Phase in Medicaid DSH reductions more gradually over a longer period of time.
  2. Apply reductions to unspent DSH funds first.
  3. Distribute reductions in a way that gradually improves the relationship between DSH allotments and the number of non-elderly, low-income individuals in a state.

Current regulations call for Medicaid DSH cuts to begin in FY 2020 and for DSH payments to decrease $4 billion a year in FY 2020, rising to $8 billion the following year.  It appears MACPAC may suggest slowing the pace of these cuts by starting with $2 billion in cuts in FY 2020 and then raising that amount $2 billion a year through 2023, when they would reach $8 billion a year.  MACPAC does not appear to prepared to suggest another delay in beginning the Medicaid DSH cuts.

As the third recommendation suggests, MACPAC is considering recommending a change in how DSH cuts are calculated on a state-by-state basis.  In particular, MACPAC appears to be focusing on how better to target cuts so that Medicaid DSH money continues to reach the hospitals that most need this money.  As a Medicaid expansion state, PEACH needs to pay particular attention to any such change in the methodology for determining how DSH cuts are allocated among the states.

MACPAC is expected to vote on these recommendations during its January 24-25 meetings.

All private safety-net hospitals participate in the Medicaid DSH program and rely heavily on these funds to serve the low-income communities in which they are located.  NAUH will monitor MACPAC’s upcoming deliberations, evaluate the potential impact of any MACPAC recommendations on NAUH members, and develop and implement an appropriate legislative strategy based on that analysis, if needed.

For a closer look at the draft MACPAC recommendations and the rationale underlying each, go here to see the presentations that guided last week’s MACPAC discussion about Medicaid DSH.

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission met for two days last week in Washington, D.C.

The following is MACPAC’s own summary of the sessions.

The October 2018 MACPAC meeting covered a range of front-line issues in Medicaid, leading off with an analysis of disproportionate share hospital (DSH) allotments on Thursday morning. Following the analysis, the Commission discussed options for March recommendations on how to structure DSH allotment reductions that are scheduled to begin in fiscal year 2020. The Commission later resumed the discussion it began in September on work and community engagement requirements, presenting new data from Arkansas on compliance and disenrollments, as well as information gathered since that meeting about Arkansas’s approach to implementation.

On Thursday afternoon, the Commission looked at the Department of Homeland Security’s proposed public charge regulations and their implications for Medicaid and the State Children’s Health Insurance Program (CHIP). A session responding to a congressional request to look at issues facing the Medicaid program in Puerto Rico was next on the agenda. A presentation from an ongoing project on how Medicaid drug coverage compares with Medicare Part D and commercial plans closed out the day.

On Friday, the Commission heard from Tom Betlach, director of the Arizona Health Care Cost Containment System, and Karen Kimsey, chief deputy at the Virginia Department of Medical Assistance Services, on their experiences integrating care for dually eligible beneficiaries.* At the final October session, the Commission reviewed the findings from a study of how six states carried out simplified Medicaid eligibility and enrollment established by the Patient Protection and Affordable Care Act (P.L. 111-148, as amended).

Supporting the discussion were the following presentations:

Because NAUH members serve so many Medicaid patients, MACPAC’s deliberations are especially relevant to them because its recommendations often find their way into future Medicaid and CHIP policies.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Children’s Health Insurance Program.  Find its web site here.

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission met recently in Washington, D.C. to review a number of Medicaid- and CHIP-related issues.

MACPAC members heard presentations on and discussed the following issues:

Find outlines of these subjects and additional materials by clicking the links above and go here for a transcript of the two days of public meetings.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Children’s Health Insurance Program.  While its recommendations are binding on neither the administration nor Congress, MACPAC’s work is highly influential and often finds its way into future Medicaid and CHIP policy.  Because private safety-net hospitals serve so many Medicaid and CHIP patients, they have an especially major stake in MACPAC deliberations and recommendations.

 

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission, a non-partisan legislative branch agency that advises Congress, the administration, and the states on Medicaid and CHIP issues, met publicly in Washington, D.C. last week.

The following is MACPAC’s own summary of its two days of meetings.

The April 2018 meeting began with session on social determinants of health. Panelists Jocelyn Guyer of Manatt Health Solutions, Arlene Ash of the University of Massachusetts Medical School, and Kevin Moore of UnitedHealthcare Community & State discussed state approaches to financing social interventions through Medicaid. In its second morning session, the Commission reviewed a draft chapter of the June 2018 Report to Congress on Medicaid and CHIP on the adequacy of the care delivery system for substance use disorders (SUDs) with a special focus on opioid use disorders.

In the afternoon, the Commission discussed the Centers for Medicare & Medicaid Services (CMS) March 2018 proposed rule changing the process by which states verify that Medicaid fee-for-service provider payment is sufficient to ensure access to care and agreed to submit comments to the agency. The first day of the meeting concluded with a review of the draft June chapter describing the status of managed long-term services and supports programs across the country. June chapters on Medicaid drug rebate policy and federal regulations governing confidentiality of SUD patient records were approved at the previous Commission meeting in March.

On Friday, the Commission heard from panelists Susan Barnidge, of the U.S. Government Accountability Office (GAO), and Judith Cash of CMS’s Center for Medicaid and CHIP Services, who discussed GAO’s report on Section 1115 demonstration evaluations and CMS’s efforts to improve the evaluation process. In the final session of the day, the Commission examined issues related to upper payment limit (UPL) hospital payments, which included findings from MACPAC’s recent review of state UPL demonstrations.

MACPAC members addressed a number of policy issues during the sessions using the following presentations to guide their discussion:

  1. State Approaches to Financing Social Interventions through Medicaid
  2. Draft Chapter: Access to Substance Use Disorder Treatment in Medicaid
  3. Proposed Rule on Exemptions to Monitoring Access in Fee for Service
  4. Draft Chapter: Managed Long-Term Services and Supports Programs
  5. Panel Discussion on Section 1115 Waiver Evaluations
  6. Uses and Oversight of Upper Payment Limit Supplemental Payments to Hospitals

MACPAC’s deliberations are especially important to private safety-net hospitals because they care for so many Medicaid and CHIP patients.

Court Rebuffs CMS on Medicaid DSH

A federal court has rejected the manner in which the Centers for Medicare & Medicaid Services collects certain Medicaid data from states in a ruling that has potential implications for eligible hospitals’ Medicaid disproportionate share hospital payments (Medicaid DSH).

In a case that challenged how CMS told hospitals to report third-party payments for Medicaid patients, the court ruled against CMS in two different ways:  first, it found that CMS had not interpreted a 2003 law in a manner consistent with congressional intent; and second, it ruled that CMS could not clarify its interpretation through a published FAQ rather than through regulations.

As a result of the ruling, some hospitals may get extra room under their hospital-specific Medicaid DSH limit.  For hospitals at, near, or above those caps, this could make it possible for them to receive additional Medicaid DSH payments from their state government.

This ruling could have positive implications for private safety-net hospitals that care for especially large numbers of Medicaid patients.

Learn more about the court ruling and its Medicaid DSH implications for hospitals in this RevCycle Intelligence article.

MACPAC Issues Annual Report, Recommendations to Congress

The Medicaid and CHIP Payment and Access Commission has published its annual report and recommendations to Congress.

MACPAC’s report addresses three primary areas:  Medicaid managed care, telehealth, and Medicaid disproportionate share payments (Medicaid DSH).

With 80 percent of Medicaid beneficiaries now enrolled in managed care plans, MACPAC offers three major recommendations for improving Medicaid managed care efforts:

  • permit states to require all of their Medicaid beneficiaries to enroll in a managed care plan
  • extend Medicaid managed care section 1915(b) waivers from two to five years
  • permit states to obtain waivers to waive freedom of choice and selective contracting restrictions

MACPAC notes the growing use of telehealth by state Medicaid programs and encourages states to continue this expansion while learning more from the efforts of one another to use telehealth effectively.

Finally, MACPAC notes that it

…continues to find little meaningful relationship across the country between DSH allotments and number of uninsured individuals, hospitals’ uncompensated care costs, and the number of hospitals providing essential community services that have high levels of uncompensated care. Total hospital charity care and bad debt continue to fall, especially in states that expanded Medicaid coverage, but Medicaid shortfall showed an uptick as a result of increased Medicaid enrollment. Now that Congress has delayed DSH allotment reductions for two years, the Commission will explore opportunities to improve the targeting of DSH payments in future reports.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the CHIP program.

Medicaid DSH is very important to the nation’s private safety-net hospitals so NAUH will carefully monitor the response to MACPAC’s Medicaid DSH recommendations.

Learn more about MACPAC’s recommendations to Congress in its Report to Congress on Medicaid and CHIP, which can be found here.

NAUH Asks Congressional Leaders to Delay Medicaid DSH Cut

Delay cuts in Medicaid disproportionate share (Medicaid DSH) allotments to states, NAUH has asked congressional leaders.

Medicaid DSH payments, which help private safety-net hospitals with the cost of caring for their low-income and uninsured patients, were slated for cuts under the Affordable Care Act in anticipation of a steep decline in the number of uninsured Americans.  While the reform law has helped millions obtain insurance, safety-net hospitals continue to serve large numbers of low-income and uninsured patients.  Recognizing this, Congress has twice delayed this Medicaid DSH cut but its moratorium on the cut ended on December 31.

Now, NAUH has asked the leaders of Congress to restore the Medicaid DSH cut delay as part of their current budget deliberations.

See NAUH’s letter to congressional leaders here.

Safety-Net Hospitals Under the Gun

Safety-net hospitals across the country – including private safety-net hospitals – face a new challenge:  adjusting to several cuts in the supplemental payments they receive from the federal government to help them serve the low-income residents of the communities in which they are located.

First there is a $2 billion cut in Medicaid disproportionate share hospital payments (Medicaid DSH).  These are payments made to hospitals that serve especially large numbers of low-income patients.  These payments help safety-net hospitals with the unreimbursed expenses they incur caring for such patients.  This cut, mandated by the Affordable Care Act but twice delayed by Congress, took effect on January 1.  In many states the value of Medicaid DSH cuts will exceed the reductions in uninsured care that hospitals have experienced since the Affordable Care Act made health insurance more widely available.

Second there is a 28 percent cut in Medicare payments for prescription drugs dispensed through the section 340B prescription drug discount program.  This cut, too, took effect on January 1.

Finally, federal funding has lapsed for the Children’s Health Insurance Program (CHIP) and for community health centers.

Safety-net hospitals are considering a number of moves to offset these losses.  Among them:  reducing or eliminating services, laying off staff, discontinuing the provision of transportation assistance, and eliminating post-discharge assistance to patients.  One safety-net hospital is even considering discontinuing providing chemotherapy to cancer patients because such drugs are especially expensive and often reimbursed through the 340B program.

These cuts have serious implications both for private safety-net hospitals and for the communities they serve.

Learn more about the cuts private safety-net hospitals face, their implications, and how they might respond to them in this Stateline article.

NAUH Seeks Action on Medicaid DSH, 340B

The National Association of Urban Hospitals has written to leaders of the House and Senate asking them to reverse implementation of Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital (Medicaid DSH) allotments to state and to block implementation of a federal regulation that would reduce Medicare payments to qualified participants in the section 340B prescription drug discount program by 28 percent.

See NAUH’s letter here.