Cuts in Medicaid disproportionate share payments, mandated in 2010 under the Affordable Care Act to take effect in 2014 but delayed by Congress ever since, are now scheduled to begin taking effect because Congress’s latest extension of the delay lapsed with the end of the federal fiscal year on September 30.
As a result, states – and hospitals that qualify for Medicaid DSH – are expected to see federal Medicaid DSH spending slashed by $8 billion a year for the next three years.
Medicaid DSH payments are made to selected hospitals based on how many low-income patients they serve who cannot afford to pay for their care. The federal government distributes Medicaid DSH money to the states and the states match that federal investment based on a complex formula that varies from state to state. The payments were to be cut because the Affordable Care Act was expected to reduce the number of uninsured patients hospitals serve – which it has, although perhaps not as much as originally anticipated.
Now, states and hospitals await news on how and when the cuts might be implemented. While Congress is widely expected to extend the Medicaid DSH delay again when it eventually passes some sort of budget legislation, some states have already reduced their Medicaid DSH payments to hospitals and hospitals are beginning to consider their own spending cuts based on an anticipated loss of these payments. Meanwhile, government officials need to write and propose regulations to implement Medicaid DSH cuts and many of those regulators have been furloughed during the current government shutdown.
Learn more about Medicaid DSH, the prospect of Medicaid DSH cuts, and what to expect next from the Modern Healthcare article “The ACA’s Medicaid DSH cut finally hit hospitals. What to know” (password required).