The Pennsylvania Department of Public Welfare has published a notice detailing its final allocations for FY 2013 for Medicaid disproportionate share hospital payments (Medicaid DSH) for OB/neonatal intensive care services, trauma services, burn centers, academic medical centers, critical access hospitals, and selected other limited groups of providers.
Read the Pennsylvania Bulletin notice here
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Safety-net and other hospitals will suffer financially when Affordable Care Act-mandated cuts in Medicare disproportionate share hospital payments (Medicare DSH) and Medicaid DSH payments begin taking effect in FY 2014.
So concludes Moody’s, the bond-rating agency.
The losses will be especially harmful to hospitals in states that do not expand their Medicaid programs and to safety-net hospitals, Moody’s believes.
Currently, Pennsylvania has no plans to expand its Medicaid program as envisioned by the Affordable Care Act.
Hospitals face other specific challenges as well as a result of these cuts.
Read more about Moody’s assessment of the impact of future Medicare DSH and Medicaid DSH cuts in this report
in Becker’s Hospital Review.
The U.S. Government Accountability Office (GAO) is now reviewing audits of states’ Medicaid disproportionate share payments (Medicaid DSH) to hospitals and is raising questions about states’ compliance with federal requirements for those payments.
Based on its analysis of state Medicaid DSH audits, GAO found that states are making Medicaid DSH payments to hospitals that exceed those hospitals’ uncompensated care costs and are inaccurately calculating those hospital uncompensated care costs. The GAO also found that states are not always targeting their Medicaid DSH payments to the hospitals that provide the most uncompensated care.
States are required to submit audits and data as a condition of receiving Medicaid DSH funds from the federal government. Currently, the Centers for Medicare & Medicaid Services (CMS) is not acting on the information it receives but will begin doing so after a transition period that ends when 2014 audits are completed. In anticipation of that time, GAO is reviewing the information CMS receives for state compliance with six federal standards for Medicaid DSH payments.
This data also may eventually be used to help implement the Medicaid DSH payment reduction mandated under the Affordable Care Act.
According to the report, Pennsylvania did not provide some of the required data, so in several instances in which the document provides specific information about individual state performance, it has nothing about Pennsylvania. It does note, however, that in FY 2007, six hospitals in the state received Medicaid payments greater than their Medicaid costs.
Because Pennsylvania’s safety-net hospitals care for so many uninsured and low-income patients and receive higher Medicaid DSH payments than other hospitals, they are far more dependent on these payments than other hospitals and will need to watch this situation closely in the future.
Learn more about GAO’s examination of Medicaid DSH payments – why it is undertaking this review, what it found, and how its findings may be used in the future – in the report More Transparency of and Accountability for Supplemental Payments are Needed, which can be found here
, on GAO’s web site.
Hospitals across the country are worried about what will happen come 2014, when the Affordable Care Act’s individual insurance mandate and Medicaid expansion take effect and they lose funds they currently receive from the federal government to help with the cost of caring for their low-income and uninsured patients.
Hospitals that care for large numbers of such patients receive what are known as disproportionate share hospital payments, commonly referred to as “DSH,” from both Medicare and Medicaid. Under the 2009 health care reform law, however, those payments will be reduced drastically in anticipation of a significant decline in the number of uninsured Americans.
The leaders of these hospitals, however, believe that even the individual insurance mandate and Medicaid expansion will still leave them with many uninsured patients to treat, including illegal residents and those who decline to buy insurance despite the insurance mandate.
Historically, DSH funds have been vital to the financial health of Pennsylvania’s safety-net hospitals.
Read more about this situation, and the challenges hospitals believe they will face as a result, in this New York Times article
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The National Health Law Program has prepared a useful Q&A about how the Affordable Care Act and its Medicaid expansion will affect Medicare disproportionate share (Medicare DSH) and Medicaid disproportionate share (Medicaid DSH) payments, both of which are so important to Pennsylvania’s safety-net hospitals.
Download that summary here.
The Supreme Court has upheld the constitutionality of the 2009 Affordable Care Act – including the much-disputed mandate that everyone obtain health insurance.
The court’s only disagreement with the reform law was with its provision requiring states to expand Medicaid eligibility as a future condition of obtaining federal Medicaid matching funds. The court ruled that expanding Medicaid eligibility should be optional and that states that choose not to expand their Medicaid programs would still receive the federal matching funds to which they have always been entitled.
In the wake of this decision, SNAP is very concerned about the interplay between the loss of the mandated Medicaid expansion and the Affordable Care Act’s requirement that Medicare DSH and Medicaid DSH payments be cut significantly in the coming years. Those cuts were predicated on the Medicaid expansion adding as many as 20 million people to the ranks of the insured, which was expected to provide additional revenue to hospitals that would help offset a reduction in their Medicare DSH and Medicaid DSH revenue.
For now, all eyes will be on Pennsylvania state officials as they decide what to do in light of the greatly enhanced federal matching funds still available for states that choose to expand Medicaid eligibility.
Across Pennsylvania, safety-net hospitals are bracing for major cuts in their Medicaid disproportionate share (DSH) payments starting in FY 2014, when a provision of the Affordable Care Act requiring such cuts takes effect.
Under the Affordable Care Act, the number of uninsured patients hospitals treat is expected to decline as health insurance becomes more affordable and accessible, theoretically reducing hospitals’ need for Medicaid DSH revenue. Under the reform law, federal spending on Medicaid DSH will be slashed $18 billion over six years.
Historically, Medicaid DSH has been viewed as a program to help hospitals that treat especially large numbers of uninsured and Medicaid patients. The cut will be implemented, however, before it is clear how many currently uninsured people will purchase health insurance – and at a time when the number of Medicaid patients safety-net hospitals serve is expected to rise significantly, not fall, when the Affordable Care Act’s new criteria for Medicaid eligibility take effect.
The scheduled cut in Medicaid DSH payments is of particular concern to the Safety-Net Association of Pennsylvania (SNAP) and Pennsylvania’s private safety-net hospitals.
Read more about the anticipated reduction of Medicaid DSH payments and its implications for safety-net hospitals in this CQ report presented by the Commonwealth Fund.