Medicaid DSH Cut Delayed
Scheduled cuts in Medicaid DSH payments to hospitals will be delayed until at least late May under new federal spending legislation.
The cuts in Medicaid disproportionate share allotments to the states, mandated by the Affordable Care Act and delayed several times by Congress – including twice in FY 2020 alone under continuing resolutions to fund the federal government – are among a number of so-called “extenders” included in spending bills passed by Congress this week and sent to the president for his signature.
Authorization for delaying the cut in allotments to the states, which would have resulted in reduced Medicaid DSH payments for many hospitals – including private safety-net hospitals – would expire on May 22. Congress is expected to address Medicaid DSH, along with surprise medical bills, the price of prescription drugs, and other health care matters, before that time.
SNAP has argued against Medicaid DSH cuts for a number of years, doing so most recently in an October 2019 message to members of Pennsylvania’s congressional delegation in which it wrote that
Should the Medicaid DSH cut take effect, Pennsylvania would lose 40 percent of its federal Medicaid DSH allotment in FY 2020 and 80 percent of its allotment each year from FY 2021 to FY 2025. Such devastating cuts could jeopardize access to care for the state’s uninsured and jeopardize the ability of the state’s safety-net hospitals to serve them. It is essential, for the sake of Pennsylvania’s health care safety net and the communities and patients that safety net serves, that the Medicaid DSH cut continue to be delayed.
Learn more about the delay in Medicaid DSH cuts and other aspects of this recent health care spending legislation in the Becker’s Hospital Review article “Congress unveils $1.3T spending deal: 5 healthcare takeaways.”
The Prescription Drug Pricing Reduction Act includes a provision that would eliminate two years of Affordable Care Act-mandated cuts in the allocation of federal money to the states for Medicaid disproportionate share hospital payments (Medicaid DSH). Those cuts have been delayed several times by Congress but were scheduled to begin in October of 2019 and run through federal FY 2025, only to be delayed again twice by continuing resolutions adopted by Congress to fund the federal government in the absence of enacted appropriations bills.
According to the bond rating agency, non-profit hospitals are seeing growing amounts of bad debt as they struggle, often unsuccessfully, to collect from patients whose high deductibles leave them on the hook for meaningful amounts of care.
The Philadelphia Business Journal reports that since Hahnemann’s closing was announced during the summer, ER volume has risen 15 percent, admissions have risen 12 percent, and births have risen more than 50 percent at Thomas Jefferson University Hospital, a SNAP member. Meanwhile, SNAP member Pennsylvania Hospital has seen its ER visits rise nine percent, SNAP member Penn Presbyterian Medical Center has seen its ER volume increase five percent, and SNAP member the Hospital of the University of Pennsylvania has seen its ER volume rise five percent.
This area is served almost exclusively by Pennsylvania safety-net hospitals and recently suffered a major loss when one of those providers, Hahnemann University Hospital, closed its doors. 
Instead, patients previously served by Hahnemann University Hospital, a Pennsylvania safety-net hospital that served especially large numbers of Medicaid and uninsured patients, are now being served by other safety-net hospitals in Philadelphia: mostly, Jefferson Health, the University of Pennsylvania Health System, Einstein Healthcare Network, and Temple University Hospital. All report increased volume in their emergency rooms, more ambulance arrivals, and more inpatient admissions, but at least so far, they also report that they are comfortably handling the increased patient volume created when Hahnemann closed its emergency room and discharged its last patients in July.
In 2015, CMS required states to track their Medicaid fee-for-service payments and submit them to the federal government as part of a process to ensure that Medicaid payments were sufficient to ensure access to care for eligible individuals. Now, CMS proposes rescinding this requirement, writing in a news release that
The Medicaid DSH cuts, mandated by the Affordable Care Act, have already been delayed three times by Congress and could be on their way to a fourth delay if the proposal advanced by the Health Subcommittee is endorsed by the Energy and Commerce Committee and works its way to the full House of Representatives, where such a proposal is thought to enjoy wide support.
According to the post, social determinants of health – income, education, decent housing, access to food, and more – significantly influence the health and well-being of individuals – including low-income individuals who have adequate access to quality health care. Medicaid, the post maintains, can play a major role in addressing social determinants of health.