NAUH Urges House to Delay Medicaid DSH Cuts

The House of Representatives should delay the proposed implementation of major cuts in Medicaid disproportionate share (Medicaid DSH) allotments to the states.

The reduction of Medicaid DSH allotments, mandated by the Affordable Care Act, has already been delayed twice by Congress, and now, a bipartisan letter is being circulated among House members asking House Speaker Paul Ryan and House minority leader Nancy Pelosi to move legislation to delay the Medicaid DSH cuts again for another two years.

In its message, NAUH has asked House members to sign onto the letter, which is being circulated by Representatives Eliot Engel (D-NY), John Culberson (R-TX), and Steve Palazzo (R-MS).

All private safety-net hospitals receive Medicaid DSH payments and all consider them a vital source of revenue to help them serve the low-income residents of the communities in which they are located.

Go here to see NAUH’s message to House members.

NAUH Comments on Proposed Cut of Medicaid DSH Payments

NAUH has expressed its opposition to a proposed change in how the federal government allocates Medicaid disproportionate share (Medicaid DSH) funding to states.

In a formal comment letter to the Centers for Medicare & Medicaid Services, which proposed the change in state Medicaid DSH allotments, NAUH wrote that it opposed CMS’s proposed division of the cuts between so-called “low-DSH states” and “non-low-DSH states,” maintaining that non-low-DSH states would, under the CMS proposal, bear too great a share of the overall reductions of state Medicaid DSH allotments.

The Affordable Care Act requires a reduction of federal Medicaid DSH spending based on the expectation that improved access to health insurance would result in fewer uninsured Americans – as it has.  For the past several years Congress delayed implementation of this requirement but its most recent delay expires in 2018 and in July CMS published a proposed rule outlining how it would implement the statutory requirement.

NAUH’s objection is to how CMS proposes implementing that reduction.

See NAUH’s formal comment letter to CMS here.

CMS Takes First Steps Toward Medicaid DSH Cuts

Federal funds allocated to states to make Medicaid disproportionate share hospital payments (Medicaid DSH) payments would be reduced beginning in FY 2018 under a new rule proposed by the Centers for Medicare & Medicaid Services.

The Medicaid DSH cuts, mandated by the Affordable Care Act but delayed several times at the behest of Congress, would come in the form of reduced Medicaid DSH allocations to individual states, with the size of those allocation cuts based on the nature of individual states’ Medicaid programs and changes in the number of uninsured patients in individual states.

The cuts were established in the Affordable Care Act based on the assumption that enhanced access to health insurance would result in hospitals serving fewer uninsured patients and therefore needing fewer Medicaid DSH resources.

The proposed regulation calls for $43 billion in savings between 2018 and 2025, a target set in the enabling legislation.

Medicaid DSH funds are absolutely essential to private safety-net hospitals because of the vital role they play in helping to underwrite the care these hospitals provide to their many low-income, uninsured, and underinsured patients.

Learn more about the CMS proposal for reducing state Medicaid DSH allocations in this article in Becker’s Hospital Review or see the draft regulation itself here.

Hospital Uncompensated Care Down

As was surely expected, reforms introduced through implementation of the Affordable Care Act have driven down uncompensated care costs for many hospitals.

How much?

A new study published by the Commonwealth Fund offers the following findings:

  • uncompensated care declines in expansion states are substantial relative to profit margins;
  • for every dollar of uncompensated care costs hospitals in expansion states had in 2013, the Affordable Care Act erased 41 cents by 2015; and
  • Medicaid expansion reduced uncompensated care burdens for safety-net hospitals that are not made whole by Medicaid disproportionate share payments (Medicaid DSH).

Learn more, including how the decline in uncompensated care costs affected different kinds of hospitals in different kinds of states, in the report “The Impact of the ACA’s Medicaid Expansion on Hospitals’ Uncompensated Care Burden and the Potential Effects of Repeal,” which can be found here, on the Commonwealth Fund’s web site.

New MACPAC Reports

The Medicaid and CHIP Payment and Access Commission has released several new reports, including:

  • a look at how states exercise flexibility in their individual Medicaid programs;
  • methodologies for setting Medicaid per capita caps;
  • a review of how states are addressing high-cost hepatitis C drugs in their Medicaid programs;
  • an analysis of Medicaid disproportionate share hospital payment (Medicaid DSH) allotments and payments; and
  • an analysis of when states will exhaust their CHIP allotments.

MACPAC is a non-partisan legislative branch agency that advises Congress, the states, and the administration on Medicaid and CHIP payment and access issues.

Find links to these and other MACPAC reports here, on the MACPAC web site.

CMS Clarifies Medicaid DSH Rule

Last week the Centers for Medicare & Medicaid Services announced a final rule addressing the treatment of third-party payers in calculating Medicaid uncompensated care costs.  This calculation affects individual hospitals’ Medicaid disproportionate share (Medicaid DSH) limit.

According to CMS,

This rule clarifies federal requirements regarding the treatment of third party payers in determining the hospital-specific Medicaid DSH payment limit, which is set by statute as a hospital’s “uncompensated costs” incurred in providing hospital services to Medicaid and uninsured patients.

The final rule makes clearer our existing policy that uncompensated costs include only those costs for Medicaid eligible individuals that remain after accounting for all payments received by or on behalf of Medicaid eligible individuals, including Medicare and other third party payments. This is consistent with the statutory requirements governing Medicaid DSH and applicable limits.

All private safety-net hospitals receive Medicaid DSH payments.

See the full rule here.

MACPAC Looks at Medicaid DSH

Hospitals that serve especially large numbers of Medicaid and low-income patients still need Medicaid disproportionate share hospital payments (Medicaid DSH) to avoid red ink despite the expansion of Medicaid and the increase in the number of uninsured people fostered by the Affordable Care Act.

So concludes the Medicaid and CHIP Payment and Access Commission (MACPAC) the non-partisan legislative branch agency that advises Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on Medicaid and Children’s Health Insurance Program issues.

In its March 2017 report to Congress, MACPAC writes that

In both expansion and non-expansion states, deemed DSH hospitals, which are statutorily required to receive DSH payments because they serve a high share of Medicaid-enrolled and low-income patients, continue to report negative operating margins before DSH payments. Read more

NAUH Weighs in on American Health Care Act

In a letter to members of Congress and selected congressional staff, NAUH shared its perspective on the American Health Care Act, the legislation Congress is considering as a means of repealing and replacing the Affordable Care Act.

The letter highlights several aspects of the proposed law NAUH appreciates and points to aspects with which it disagrees, including its failure to restore Medicare DSH payments to pre-Affordable Care Act levels, its continuation of Medicaid DSH cuts in Medicaid expansion states for two more years, and a methodology for indexing future growth in the program’s spending that NAUH believes will leave Medicaid underfunded in the future.

Find the complete letter here, on the NAUH web site.


MACPAC Points to March Medicaid DSH Report to Congress

Required to report annually to Congress on the state of the Medicaid program, members of the Medicaid and CHIP Payment and Access Commission reviewed drafts of their proposed March report to Congress at the agency’s January meeting in Washington, D.C.

In its draft report MACPAC addresses the Medicaid disproportionate share hospital payment program (Medicaid DSH), including DSH allotments, their relationship to the number of uninsured people, the amount and sources of hospital uncompensated care costs, and the impact of Medicaid DSH on hospitals that provide especially large amounts of uncompensated care while also providing essential community services.

The draft MACPAC report addresses:

  • the decline in the number of uninsured Americans;
  • the Medicaid DSH cuts scheduled to begin in federal FY 2018; and
  • the possibility of changing how Medicaid DSH payments are targeted to DSH-eligible hospitals.

All private safety-net hospitals receive Medicaid DSH payments and those payments are very important to them because they serve so many more uninsured patients than the typical community hospital.

See a draft of the chapter of the MACPAC report on Medicaid DSH here, on the MACPAC web site.

MACPAC Meets, Discusses Medicaid DSH Issues

Last week the Medicaid and CHIP Payment and Access Commission met in Washington, D.C. to review aspects of its required March report to Congress and to address other Medicaid and CHIP issues.

Included on the agenda of the meeting were:

  • a review of chapters of the March report on Medicaid disproportionate share (Medicaid DSH) and monitoring of access to care;
  • alternative approaches to state financing of their Medicaid programs;
  • Medicaid coverage for low-income adults; and
  • Medicaid program integrity issues.

MACPAC’s efforts, although not binding on the administration, carry a great deal of weight with those institutions.  In addition, they are very important to urban safety-net hospitals because those hospitals care for so many Medicaid patients.

See the presentations used to help guide these discussions here, on MACPAC’s web site.