MACPAC Looks at Medicaid DSH

With Medicaid disproportionate share payments (Medicaid DSH) facing future reductions, the agency charged with advising Congress on Medicaid and Children’s Health Insurance payment and access matters is considering what changes the federal supplemental Medicaid payment program might need.

macpacAt a recent meeting in Washington, D.C., the Medicaid and CHIP Payment and Access Commission discussed the changing role and purpose of Medicaid DSH as more Americans obtain health insurance through private or public sources. MACPAC commissioners noted that hospital uncompensated care is falling, especially in states that have taken advantage of the Affordable Care Act to expand their Medicaid programs.

A new Medicaid DSH formula set to be used for FY 2018, based more heavily than the current formula on the number of uninsured people in individual states, is expected to result in larger-than-average reductions for hospitals in Medicaid expansion states.

Among the steps commissioners discussed were examining how hospitals use their Medicaid DSH funds; considering how any changes in the distribution of Medicaid DSH funds might affect other parts of states’ health care systems; and the role states should play in determining the allocation of Medicaid DSH funds.

Medicaid DSH funds are a vital source of support to help private safety-net hospitals care for their many uninsured patients.

For a closer look at the issue and MACPAC’s deliberations, see this CQ Roll Call article presented by the Commonwealth Fund.

NAUH Comments on Proposed Medicaid DSH Regulation

The National Association of Urban Hospitals has written to the Centers for Medicare & Medicaid Services to object to how the agency proposes changing its methodology for calculating eligible hospitals’ Medicaid disproportionate share (Medicaid DSH) payments.

NAUH LogoIn particular, NAUH opposes the manner in which CMS would treat payments from Medicare and third-party payers made on behalf of Medicaid-eligible individuals.

In NAUH’s view, the letter notes,

…the hospital-specific DSH limit has come to penalize the very hospitals – including private urban safety-net hospitals – that Medicaid DSH payments were designed to support.

The NAUH letter explains that

What troubles NAUH at this time is CMS’s apparent decision to rationalize and codify in regulations a narrower interpretation of the Medicaid DSH limit than what Congress described in section 1923(g) of the Social Security Act.

Read NAUH’s complete letter here.

CMS Proposes Medicaid DSH Rule

The Centers for Medicare & Medicaid Services has proposed a new rule that would clarify the basis for eligible hospitals’ Medicaid disproportionate share hospital payments (Medicaid DSH).

Individual hospitals’ Medicaid DSH payments are based on their uncompensated care costs and the rule clarifies that only uncompensated costs for Medicaid patients for whom hospitals receive no other payments, such as from Medicare, state or local governments, or third-party payers, would count toward their hospital-specific Medicaid DSH limit.

federal registerSee the rule here. Interested parties have until September 15, 2016 to submit formal comments to CMS about its proposal.

Representatives of private safety-net hospitals who would like to know more about how this proposal might affect their hospital can use the “contact us” link on this screen to seek further information.

MACPAC Unhappy With How DSH is Dished

Medicaid disproportionate share hospital payments (Medicaid DSH) are not getting to the hospitals that need them most, according to the independent agency that advises Congress and the administration on Medicaid access, payment, and care delivery issues.

In its March 2016 Report to Congress on Medicaid and CHIP, the Medicaid and CHIP Payment and Access Commission found

…little meaningful relationship between DSH allotments and three aspects of DSH payments that Congress asked us to study: 1) the relationship of state DSH allotments to data relating to changes in the number of uninsured individuals, 2) data relating to the amount and sources of hospitals’ uncompensated care costs, and 3) data identifying hospitals with high levels of uncompensated care that also provide access to essential community services for low-income, uninsured, and vulnerable populations.

macpacMACPAC also observed that

Although early reports suggest that the coverage expansions are improving hospital finances in general, it is not yet clear how hospitals that are particularly reliant on Medicaid DSH payments are being affected.

MACPAC further maintains that

…DSH allotments and payments should be better targeted, consistent with their original statutory intent.

Noting an obstacle to such an undertaking, MACPAC

…recommends that the Secretary [of Health and Human Services] collect and report hospital-specific data on all types of Medicaid payments for all hospitals that receive them. In addition, the Secretary should collect and report data on the sources of non-federal share necessary to determine net Medicaid payment at the provider level.

Finally, MACPAC promises to continue looking into this challenge and exploring possible solutions.

In future reports on DSH payment policy, which MACPAC will include in its annual March reports to Congress, the Commission will continue to monitor the ACA’s effect on hospitals receiving DSH payments. We also plan to explore potential approaches to improving targeting of federal Medicaid DSH funding, including modifying the criteria for DSH payment eligibility, redefining uncompensated care for Medicaid DSH purposes, and rebasing states DSH allotments.

To learn more about what MACPAC had to say about Medicaid DSH and other Medicaid- and CHIP-related issues, go here to see the MACPAC report March 2016 Report to Congress on Medicaid and CHIP.

MACPAC: Medicaid DSH Payments Not Always Reaching Targeted Providers

In many cases, Medicaid disproportionate share payments (Medicaid DSH) are being made to hospitals that do not necessarily serve especially large proportions of Medicaid and other low-income patients.

So concludes a new report from The Medicaid and CHIP Payment and Access Commission (MACPAC), is a non-partisan legislative branch agency that performs 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 issues affecting Medicaid and the State Children’s Health Insurance Program (CHIP).

macpacAccording to a new MACPAC report,

Medicaid DSH payments provide substantial support to safety-net hospitals by helping to offset uncompensated care costs for Medicaid and uninsured patients. In 2014, Medicaid made a total of $18 billion in DSH payments ($8 billion in state funds and $10 billion in federal funds). About half of all U.S. hospitals receive such payments, with most going to hospitals that serve a particularly high share of Medicaid and other low-income patients, known as deemed DSH hospitals. But more than one-third of DSH payments are made to hospitals that do not meet this standard.

To remedy this problem, MACPAC recommends more and better data collection, noting that

The current variation in state DSH allotments stems from the variations that existed in state DSH spending in 1992.

Medicaid DSH has long been a subject of great interest to the nation’s private safety-net hospitals because, serving so many Medicaid and low-income patients, they are the very providers for which Medicaid DSH payments have always been intended.

The MACPAC analysis Report to Congress on Medicaid Disproportionate Share Hospital Payments covers a broad range of Medicaid DSH-related issues. Find it here, on the MACPAC web site.

GAO: More Information Needed About Supplemental Medicaid Payments

More data is needed about the supplemental Medicaid payments states make to hospitals and how those payments are financed, according to a new report from the U.S. Government Accountability Office (GAO).

According to the GAO, states are increasingly funding non-disproportionate share gao(Medicaid DSH) supplemental Medicaid payments to hospitals with funds from local governments and providers that are then matched by the federal government. In some states those supplemental payments, with the help of federal Medicaid matching funds, result in hospitals receiving reimbursement from Medicaid that exceeds the cost of the care they provide to their Medicaid patients.

In response to this concern, the GAO has urged the Centers for Medicare & Medicaid Services (CMS) to collect more and better data about how states finance their Medicaid programs and to do more to ensure that accuracy of that data. For its part, CMS maintains that its current efforts are adequate.

Learn more about this issue from the GAO report Improving Transparency and Accountability of Supplemental Payments and State Financing Methods, which can be found here.

Feds Release Medicaid DSH “Uninsured” Definition

The Centers for Medicare & Medicaid Services (CMS) has published a new regulation that defines “uninsured” for the purpose of calculating the limit for how much individual hospitals may receive in Medicaid disproportionate share hospital payments (Medicaid DSH).

law booksUnder federal law, Medicaid DSH payments to hospitals cannot exceed the uncompensated costs of the services those hospitals provide to Medicaid recipients and the uninsured.  In calculating hospital-specific limits, according to the new regulation,

… the calculation of uncompensated care for purposes of the hospital-specific DSH limit will include the cost of each service furnished to an individual by that hospital for which the individual had no health insurance or other source of third party coverage.

This regulation is important to private safety-net hospitals because they receive Medicaid DSH payments and serve more uninsured patients than the typical hospital.

Find the complete regulation here, in the Federal Register.

MACPAC Looks at Medicaid, CHIP Issues

The non-partisan federal agency charged with advising Congress, the Department of Health and Human Services, and the states on matters involving Medicaid and the Children’s Health Insurance Program (CHIP) met last week in Washington, D.C.

The Medicaid and CHIP Payment and Access Commission (MACPAC) addressed a number of CHIP-related issues during its September 18-19 meetings, including the future of the program, its funding, state experiences with CHIP changes, and consumer protections.

macpacMACPAC also looked at a variety of Medicaid issues, including state Medicaid expansions through premium assistance, enrollment so far in 2014, the Centers for Medicare & Medicaid Services’ Medicaid program integrity plan, early experiences of new enrollees, and future reductions in Medicaid disproportionate share payments (Medicaid DSH).

CHIP and Medicaid are especially important for the nation’s private safety-net hospitals because they serve so many low-income patients.  The National Association of Urban Hospitals (NAUH) has been particularly active in advocating delays in Affordable Care Act-mandated reductions in Medicaid DSH payments.

For a summary of the commission’s deliberations, see this CQ HealthBeat article presented by the Commonwealth Fund.

To see the presentations made during the two-day session go here, to MACPAC’s web site.

Study Points to Risk of DSH Cuts

A new study suggests that future cuts in Medicare disproportionate share (Medicare DSH) and Medicaid DSH payments could pose problems for hospitals that serve large numbers of uninsured patients.

According to a new report in the journal Health Affairs,

Such cuts in government funding of uncompensated care could pose challenges to some providers, particularly in states that have not adopted the Medicaid expansion or where implementation of health care reform is proceeding slowly.

Medicare DSH and Medicaid DSH payments help underwrite the uncompensated care hospitals provide to their uninsured patients.  All private safety-net hospitals receive such payments.

health affairsEven after Affordable Care Act reforms take effect, 25 to 30 million Americans are expected to remain uninsured.  Medicare DSH payments are expected to decline $22.1 billion between now and 2019 and Medicaid DSH payments, temporarily delayed by two separate actions of Congress, are expected to decline $17.1 billion through 2020.

The new study supports The National Association of Urban Hospitals’ long-time position that Medicare DSH and Medicaid DSH cuts would be harmful to private, non-profit urban safety-net hospitals and should be delayed.   NAUH also has endorsed legislation calling for such a delay.

Learn more about the Health Affairs study in this Washington Post article and find the study itself here, on the web site of Health Affairs.

Some Hospitals Stand to Lose Medicaid Expansion, DSH Money

When the Supreme Court made Medicaid expansion optional rather than mandatory for states, its decision affected the delicate balance of one aspect of the Affordable Care Act.

Hospitals that serve large numbers of low-income and uninsured patients receive special supplemental payments from Medicare and Medicaid to help subsidize the care they provide to these patients:  disproportionate share payments, or DSH payments.

And because Medicaid expansion was expected to reduce the number of uninsured patients such hospitals serve, the Affordable Care Act calls for reducing over a period of years both the Medicare DSH and Medicaid DSH payments hospitals receive.

iStock_000005787159XSmallBut in states that choose not to expand their Medicaid programs, hospitals that qualify for Medicare DSH and Medicaid DSH payments will continue to serve similar numbers of low-income and uninsured payments but now face the prospect of doing so with smaller Medicare DSH and Medicaid DSH payments as the Affordable Care Act requirement begins reducing those payments.

This could prove especially troublesome for private safety-net hospitals located in states that do not expand their Medicaid program because such hospitals serve especially large numbers of low-income and uninsured patients.

The Wall Street Journal has taken a look at how this situation will affect hospitals in just one state that is not expanding its Medicaid program.  See its story here.