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Senate Finance Committee Reports on Supplemental Medicaid Payments

The majority members of the Senate Finance Committee have published a report on supplemental Medicaid payments.

According to the new document,

This report seeks to increase educational understanding of Medicaid supplemental payments, as well as outline the reporting mechanisms for these payments to ensure adequate stewardship of taxpayer dollars. 

The report consists of descriptions of the different types of supplemental Medicaid payments that states make to some providers, including:

  • Medicaid disproportionate share payments (Medicaid DSH)
  • non-DSH payments
  • upper-payment limit payments (UPL payments)
  • demonstration supplemental payments
  • medical education payments

It also describes the magnitude of these payments, noting that supplemental Medicaid payments accounted for $50 billion of the $600 billion spent on Medicaid by the federal and state governments in 2016, the most recent year for which comprehensive data is available.  In addition, it outlines how those payments are distributed while also considering how these payments affect the overall adequacy of Medicaid payments to providers; this varies from state to state.

Finally, the report reviews how the states finance their Medicaid programs, including through provider taxes, intergovernmental transfers, and certified public expenditures, and how states report their supplemental Medicaid payments to the federal government.

All private safety-net hospitals receive supplemental payments from their state Medicaid programs and consider those payments essential resources supporting their ability to serve the residents of the low-income communities in which they are generally located.

To learn more, see the report “Greater Transparency of Supplemental Payments Needed,” which was prepared by the majority staff of the Senate Finance Committee.

MACPAC Recommends Changes in Medicaid Shortfall Definition

Hospitals’ calculation of their Medicaid shortfall would change under a recommendation that MACPAC voted to make to Congress.  That change, in turn, could affect hospitals’ future Medicaid disproportionate share payments.

Last week the Medicaid and CHIP Payment and Access Commission voted overwhelmingly to change how hospitals calculate their Medicaid shortfall:  the difference between what they spend caring for their Medicaid patients and what Medicaid pays them for that care.  Under MACPAC’s proposal, hospitals would need to deduct from their shortfall total all third-party payments they receive for the care they provide to their Medicaid patients.

If this proposal were to be adopted, it has the potential of changing Medicaid DSH allocations among the states and change the distribution of Medicaid DSH funds within individual states, although the Congressional Budget Office estimates that it would have little impact on either measure.

Complicating the MACPAC recommendation is last year’s federal court ruling that third-party payments could not be deducted from hospitals’ Medicaid shortfall totals because the Centers for Medicare & Medicaid Services lacks the authority to implement such a policy.  Making such a change therefore would require action by Congress.

Learn more about the MACPAC recommendation and its potential implications for hospitals and their Medicaid DSH payments in the Fierce Healthcare article “’Medicaid shortfall’ definition should change when tallying DSH payments, MACPAC says.”

 

Delay Medicaid DSH Cuts, Pelosi Says

Medicaid DSH cuts should be delayed, House Speaker Nancy Pelosi (D-CA) told a gathering of hospital officials.

According to Speaker Pelosi,

DSH cuts threaten to erode the health of community hospitals, safety-net hospitals and rural hospitals, [affecting] the health of not only the families that rely on Medicaid, but any person who relies on these hospitals for care.

NASH has long urged Congress to delay or even eliminate Affordable Care Act-mandated cuts of Medicaid disproportionate share payments, doing so twice in the past week: first in a letter to Senate Finance Committee chairman Charles Grassley (R-IA) and then in a message to all House members. NASH believes this cut would be especially harmful for the nation’s private safety-net hospitals.

Learn more about Speaker Pelosi’s remarks in the Becker’s Hospital Review article “House speaker urges Congress to ease Medicaid payment cuts to hospitals serving low-income patients.”

NASH Asks House to Support Delay of Medicaid DSH Cut

Working to prevent the scheduled October 2019 reduction of Medicaid DSH allocations to the states, NASH has reached out to the House of Representatives for help.

In a message delivered to all House members, NASH asked those members to sign onto a bipartisan letter being circulated by two of their colleagues, Representatives Eliot Engel (D-CA) and Pete Olson (R-TX), that asks House Speaker Nancy Pelosi (D-CA) and minority leader Kevin McCarthy (R-CA) to advance legislation to delay an Affordable Care Act-mandated reduction of Medicaid disproportionate share allocations to the states.  Congress has already delayed this cut three times.

In its letter, NASH explains that

If implemented, this cut would be harmful for private safety-net hospitals and the communities they serve throughout the country.

See the Engel-Olson letter here and see NASH’s message to House members here.

More Potential Budget Obstacles for Private Safety-Net Hospitals

Part two of the Trump administration’s proposed FY 2020 budget brought more potential bad news for private safety-net hospitals.

 

Last week’s “lean budget” released by the White House included a number of challenges for private safety-net hospitals and this week’s release, intended to fill in some of the blanks that last week’s document left, brought more of the same.

Proposed Medicare challenges include:

  • a call for establishing a new process for calculating Medicare disproportionate share (Medicare DSH) uncompensated care payments
  • slashing Medicare bad debt reimbursement from 65 percent to 25 percent
  • continued movement toward site-neutral payments for outpatient services provided at hospital outpatient facilities

Newly proposed Medicaid challenges include:

  • extending Medicaid disproportionate share (Medicaid DSH) cuts beyond the currently planned six years
  • redesigning the formula for allocating Medicaid DSH funds to the states
  • authorizing states to verify beneficiaries’ Medicaid eligibility more than once a year
  • permitting states to apply means tests to Medicaid eligibility

The latest FY 2020 budget proposal also calls for:

  • consolidating Medicare, Medicaid, and children’s hospital medical education payments into single new capped medical education grant program
  • reduced 340B prescription drug discount program payments for some hospitals
  • reducing the grace period for payment of premiums for health insurance purchased on an insurance exchange
  • income-based increases in premiums for low-cost insurance purchased on those exchanges

All of these changes, if implemented, would pose problems for NASH members and most private safety-net hospitals.

Learn more from this week’s White House budget document.

Hospital Groups Join NASH in Calling for Delay of Medicaid DSH Cuts

Seven hospital trade groups have written to congressional leaders asking them to delay Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital payments (Medicaid DSH) that are scheduled to take effect in October of this year.

Their letter echoes a long-time advocacy priority of the National Alliance of Safety-Net Hospitals.

In their letter the groups, led by the American Hospital Association and the Association of American Medical Colleges, write of the underlying rationale for the Affordable Care Act mandate for Medicaid DSH cuts that

…the coverage rates envisioned under the ACA have not been fully realized, and tens of millions of Americans remain uninsured. In addition, Medicaid underpayment continues to pose ongoing financial challenges for hospitals treating our nation’s most vulnerable citizens.

NASH has long advocated such delaying Medicaid DSH cuts, most recently in comments to Congress in response to the proposed State Accountability, Flexibility, and Equity for Hospitals Act.

Delaying Medicaid DSH cuts also is identified as an advocacy priority of private safety-net hospitals in NASH’s 2019 policy and advocacy agenda.

MACPAC: Slow Medicaid DSH Cuts

Slow the pace of scheduled cuts in Medicaid disproportionate share hospital payments (Medicaid DSH), the non-partisan agency that advises Congress and the administration will tell Congress in its next report of policy recommendations.

The Medicaid and CHIP Payment and Access Commission voted 16-1 recently to recommend to Congress that Medicaid DSH cuts, mandated by the Affordable Care Act but delayed three times by Congress, be reduced in size and spread out over a longer period of time.

Currently, Medicaid DSH allotments to the states are scheduled to be reduced $4 billion in FY 2020 and then $8 billion a year in FY 2021 through FY 2025.  MACPAC recommends that the cuts be reduced to $2 billion in FY 2020, $4 billion in FY 2021, $6 billion in FY 2022, and $8 billion a year from FY 2023 through FY 2029.

MACPAC commissioners also voted to urge Congress to restructure the manner in which Medicaid DSH allotments to the states are calculated based on the number of low-income individuals who reside in the states.

Most private safety-net hospitals receive Medicaid DSH payments and consider them a vital resource in helping to underwrite the uncompensated care they provide to uninsured patients.  NASH supports delaying the implementation of Medicaid DSH cuts and reducing the size of the cuts once implementation begins, doing so most recently in a letter to Senator Marco Rubio in response to Mr. Rubio’s introduction of Medicaid DSH legislation.

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.

Learn more about MACPAC’s actions on Medicaid DSH in the Fierce Healthcare article “MACPAC calls for Congress to delay cuts to safety-net hospitals.”

NASH Comments on Proposed Medicaid DSH Revamp

In mid-December, Senator Marco Rubio (R-FL) introduced the State Accountability, Flexibility, and Equity (SAFE) for Hospitals Act, which seeks to restructure the federal Medicaid disproportionate share hospital payment program (Medicaid DSH).  Hospitals that care for especially large numbers of Medicaid, low-income, and uninsured patients often receive supplemental payments, called Medicaid DSH payments, from their state government to help underwrite costs associated with such patients for which they are not reimbursed.  Medicaid DSH payments are funded in part by the federal government and in part by the individual states.

As part of his introduction of his bill, Senator Rubio contacted many stakeholder groups and invited them to review and comment upon his proposal.

Among the groups contacted was the National Alliance of Safety-Net Hospitals, and last week, NASH wrote to Senator Rubio to convey its views.

Instead of addressing specific aspects of the proposal, NASH offered three principles it believes should guide any effort to modify the Medicaid DSH program.  Those principles are:

  • Delay the scheduled Medicaid DSH cuts. (Significant reductions of Medicaid DSH allotments to states, mandated by the Affordable Care Act but delayed three times by Congress, are scheduled to take effect in FY 2020.)
  • Any changes in Medicaid DSH must reflect the role Medicaid DSH plays in state Medicaid programs.
  • Any changes in Medicaid DSH must preserve states’ flexibility to use Medicaid DSH resources in the manner they believe best serves their individual Medicaid programs.

Learn more about the SAFE Hospitals Act from Senator Rubio’s news release outlining the proposal and learn about NASH’s response to his request for stakeholder input from the letter NASH sent to Senator Rubio last week.

 

NASH Unveils 2019 Agenda

The National Alliance of Safety-Net Hospitals has unveiled its public policy advocacy agenda for 2019.

That agenda explains that NASH will:

  • Address Medicare issues such as continuing threats to private safety-net hospitals’ Medicare DSH payments, audits of the Medicare cost report’s S-10 form, graduate medical education payments, potential cuts in bad debt, 340B, the participation of private safety-net hospitals in value-based purchasing and alternative payment model programs, and the expected national conversation about “Medicare for all.”
  • Address Medicaid issues such as the adequacy of Medicaid DSH payments, possible reductions in Medicaid eligibility and benefits, the implications of a new proposal to define whether new immigrants and their families pose a threat of becoming “public charges,” the possible introduction of Medicaid block grants, and possible new restrictions on how states may finance their Medicaid programs.
  • Work to protect private safety-net hospitals from federal spending cuts.
  • Reintroduce itself to Congress and the administration.
  • Seek to enhance its ability to help shape government health care policy in Washington by recruiting more members.

For NASH’s complete 2019 advocacy agenda click here

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.