Noteworthy News

NAUH Proposes Change to Reduce DSH Cut

In a letter to the Centers for Medicare & Medicaid Services (CMS), the National Association of Urban Hospitals (NAUH) has asked CMS to modify its methodology for reducing the Medicare disproportionate share (Medicare DSH) pool for FY 2014.

Under the Affordable Care Act, that Medicare DSH pool is supposed to begin growing smaller in FY 2014 to reflect an expected decrease in the number of uninsured Americans as a result of the reform law’s expanded Medicaid eligibility and insurance subsidies.

While CMS was required to use Congressional Budget Office (CBO) estimates for the number of people who will gain insurance, NAUH noticed that the CBO estimate covered calendar year 2014, whereas the Medicare DSH cut only needed to account for the first three quarters of 2014 because the 2014 federal fiscal year ends on September 30, 2014.  The result, NAUH concluded, was that the CBO number overestimates how many people will obtain health insurance and therefore reduces the Medicare DSH pool too much.

With this in mind, NAUH developed an alternative methodology for prorating or normalizing the CBO estimate in a way that enables CMS to abide by Affordable Care Act requirements while still making more accurate its calculation of the FY 2014 Medicare DSH pool.  The result is that under NAUH’s proposed methodology, the FY 2014 DSH pool would be $8.7 billion rather than the $8.2 billion proposed by CMS – a savings of $500 million for urban safety-net hospitals and others that qualify for Medicare DSH.

NAUH shared this new methodology with a variety of provider groups across the country and expects some of them to propose it to CMS in their own comment letters.

Find NAUH’s regulation comment letter hereNAUH Logo.  The NAUH proposal begins on page three, under the heading “NAUH’s Alternative Proposal for Resizing the Medicare DSH Pool.”

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