Noteworthy News

White House Proposes Delaying Medicaid DSH Cut

The Obama administration has proposed putting off Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital payments (Medicaid DSH) for one year.

Under the health reform law, hospitals were to begin seeing significant reductions in their Medicaid DSH payments beginning in FY 2014.  The rationale behind the cut was that with reform expanding Medicaid eligibility and making health insurance more affordable to working people, hospitals would no longer need as much Medicaid DSH money because they would be providing less uncompensated care to uninsured patients.

When the Supreme Court ruled that the previously mandatory Medicaid expansion could only be optional, however, it became more difficult to predict how much uncompensated care hospitals will continue to provide.  For this reason, the administration’s budget calls for delaying $500 million in Medicaid DSH cuts.  Those cuts are now expected to begin in FY 2015.

Medicaid DSH revenue is extremely important to urban safety-net hospitals, which care for far more uninsured and underinsured patients than the typical acute-care hospital.

The proposed delay in Medicaid DSH has no impact on the plan to begin major cuts in Medicare disproportionate share hospital payments (Medicare DSH) in the coming fiscal year.  Although the administration has not yet revealed how it will calculate hospitals’ future Medicare DSH payments, those cuts are still expected to move forward as scheduled.

To learn more about why the delay in cutting Medicaid DSH payments was proposed and how it may affect hospitals, read this Washington Post blogHealth Care Reform/Flag.

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