Why Federal Medicaid Disproportionate Share Hospital Payments Should Not Be Cut

In the Commonwealth Fund’s To the Point blog, Sara Rosenbaum, the Harold and Jane Hirsh Professor of Health Law and Policy at the Milken Institute School of Public Health, makes a case for staving off harmful cuts to state Medicaid disproportionate share hospital (DSH) payments. As Rosenbaum explains, federal law requires that state Medicaid programs make DSH payments to qualifying hospitals that serve a large number of Medicaid and uninsured individuals. Congress may delay a funding reduction for state Medicaid DSH payments as part of end-of-year legislation, but this may hinge on finding a funding strategy other than the one originally chosen by the House of Representatives — a more than $6 billion cut in critical public health funding from the Prevention and Public Health Trust Fund.In her blog, Rosenbaum explains why the major gains in coverage anticipated for the economically disadvantaged under the Affordable Care Act’s adult Medicaid expansion inspired Congress to schedule a substantial reduction in federal Medicaid DSH payments beginning in 2014. The blog also describes the impact of the United States Supreme Court’s 2012 decision to make Medicaid expansion optional.Rosenbaum says: “Should final congressional action before the holiday include a DSH cut delay, it would be the latest in a line of postponed Medicaid DSH cuts enacted by Congress over several years. Without another postponement, hospitals will lose $2 billion of the almost $12 billion federal allotment for fiscal year 2018. If this last-minute effort to stop the cuts once again as part of the spending bill does not succeed, then over 10 years, the cuts would reduce DSH payments by some $43 billion according to the Medicaid and CHIP Payment and Access Commission (MACPAC).”Read more