Medicaid Disproportionate Share Hospital (DSH) payment cuts go into effect on October 1 if no action is taken by Congress. The Sisters of Charity Health System joins the Catholic Health Association of the United States (CHA) in our belief that Congress should repeal the Medicaid DSH reductions.
President Ronald Reagan and Congress created Medicaid DSH payments to sustain hospitals that serve a disproportionate number of low-income and uninsured patients. In treating those who have nowhere else to turn, these hospitals incur substantial uncompensated costs. Furthermore, these same hospitals typically operate on very narrow, or even negative, margins. Medicaid DSH payments allow them to continue serving those who need the most help. Medicaid DSH payments not only support hospitals in cities across the country—such as St. Vincent Charity Medical Center and Mercy Medical Center—these payments are also especially important to rural hospitals, which often face added financial burdens.
Through bipartisan efforts, Congress has repeatedly recognized the importance of Medicaid DSH payments, and passed legislation to delay cuts to the program:
- The Bipartisan Budget Act of 2013 delayed the cuts, scheduled to begin in Fiscal Year (FY) 2014, for two years until FY 2016;
- The Protecting Access to Medicare Act of 2014 delayed the FY 2016 reduction; and
- The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) delayed the scheduled FY 2017 cuts by one additional year.
Should Congress fail to delay the cuts scheduled to begin on October 1, safety net hospitals will face a financial shortfall of $2 billion in FY 2018. These cuts will grow to $8 billion by 2024. Our nation’s hospitals cannot sustain losses of this magnitude. Institutions will be forced to shutter, taking away an important safety net.
DSH funding reductions were included in the Affordable Care Act (ACA) because the law was designed to significantly reduce the number of uninsured in the United States, which in turn would reduce hospital uncompensated care costs. Following the Supreme Court decision that the Medicaid expansion must be a state option, a number of states chose not to expand their Medicaid programs resulting in markedly lower uninsured reductions than anticipated. The corresponding reductions in uncompensated care were also not realized to the degree expected.