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Disproportionate Share Hospital Payments: A Minibus Rider

As a part of our ongoing blog series we have provided details on the structure, funding, and outlook of several expiring health care provisions, that we’ve referred to as the health care minibus. The minibus includes all of the health care extenders left behind from the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Health care extenders refer to a number of temporary policies that need reauthorization or annual appropriations, including but not limited to, the Children’s Health Insurance Program (CHIP), the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) programcommunity health center fundingtherapy caps, special needs plans (SNPs), and Medicaid disproportionate share hospital (DSH) payment reductions.

In this post we will discuss Medicaid DSH funding cuts and recent activity to address such cuts.

Overview of Issue

Medicaid DSH payments are Medicaid payments made to hospitals that serve a high proportion of Medicaid, low-income, and uninsured patients. Medicaid DSH payments help offset the cost of uncompensated and undercompensated care.

The Affordable Care Act (ACA) reduced federal Medicaid DSH allotments to account for decreases in uncompensated care anticipated as a result of the Medicaid expansion. However, not all states expanded Medicaid, meaning some states face greater pressure to reimburse DSH hospitals treating low-income and uninsured patients.

Congress has acted several times to modify and delay cuts to the program, most recently through MACRA, which delayed scheduled cuts for until September 30, 2017, with DSH cuts implemented each year until FY 2025.

If Congress does not delay or repeal the Medicaid DSH cuts, hospitals receiving DSH payments would see a reduction of approximately $2 billion in FY 2018.

Recent Activity on Medicaid DSH Cuts

There is some activity on Capitol Hill to address Medicaid DSH cuts. The House HEALTHLY KIDS Act eliminates Medicaid DSH cuts for FY 2018 but it does extend Medicaid DSH cuts for FY 2026 and 2027. Additionally, last week during the Senate and House mark-ups of their respective CHIP bills, amendments were introduced but then withdrawn or not agreed to relating to DSH. Senator Johnny Isakson (R-GA) introduced two amendments to the KIDS Act relating to DSH. The first would have eliminated DSH cuts in FY 2018 and 2019 but extended cuts to FY 2026 with a $5 billion reduction that year. The second would have eliminated DSH cuts in FY 2018 and 2019 but have extended cuts to FY 2026 and 2027 with a $8 billion reduction each year. It would also create a fund that would bring states with a below average DSH allotment per uninsured person up to the national average. On the House side, Rep. Eliot Engel (D-NY) introduced an amendment related relating to DSH, which would have eliminated DSH cuts for FY 2018 and 2019 but extended DSH cuts to FY 2026 and 2027.

We will continue to report on developments in this area as they arise, so watch this space.

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Manager of Government Relations

Prior to joining ML Strategies, Eli was a legislative correspondent for US Senator Martin Heinrich (D-NM), where his experience included health care, education, child welfare, social security, food assistance, and poverty issues specifically as they relate to the Affordable Care Act, Medicare, and Social Security. Previously, Eli served as a legislative intern with Senator Heinrich. He also served as a legislative intern with Senator Dick Durbin (D-IL), where he worked on issues related to education, health, and commerce. Eli has also served as an intern at a political...

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Director of Health Policy

Katie is Director of Health Policy at ML Strategies and provides advice and guidance on issues relating to Medicaid, Medicare, and dually eligible beneficiaries.

Prior to joining the firm, Katie was a senior analyst with the Medicaid and CHIP Payment and Access Commission (MACPAC), a nonpartisan agency that provides Congress, the Secretary of the US Department of Health and Human Services, and states with analysis and recommendations on issues affecting Medicaid and the State Children’s Health Insurance Program (CHIP). There Katie researched, developed, and prepared Medicaid policy recommendations; conducted legislative analyses, data analyses, and policy analyses related to a host of Medicaid and Medicare issues; and provided policy analyses and technical assistance for Congressional staff on draft bills and policy questions, among many other duties.

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Rodney L. Whitlock, Mintz Levin, ML Startegies, Vice President, Health policy Advisor, Lawyer, Attorney
ML Strategies - Vice President

Rodney is a veteran health care policy professional with more than 20 years of experience working with the US Congress, where he served as health policy advisor and as Acting Health Policy Director for Finance Committee Chairman Chuck Grassley of Iowa and, earlier, on the staff of former US Representative Charlie Norwood of Georgia.

During his years with Representative Norwood, Rodney managed the Patients’ Bill of Rights, which passed the House in 1999 and 2001. In February 2005, Rodney left the office of Congressman Norwood to join the Finance...

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