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Federal Lawmakers Urge Delay of DSH Payment Cuts; Eight from PA Sign Letter

September 29, 2017

More than 220 members of the U.S. House of Representatives, including eight from Pennsylvania, called for a delay in cuts to hospitals that serve a high proportion of Medicaid and uninsured patients. In the absence of Congressional action, resources provided through the Disproportionate Share Hospital (DSH) program will be cut by $2 billion starting October 1, 2017, and the cuts will grow to $8 billion by 2024.

Pennsylvania Congressmen Brady (D, PA-01), Boyle (D, PA-13), Dent (R, PA-15), Doyle (D, PA-14), Evans (D, PA-02) Fitzpatrick (R, PA-08), Murphy (R, PA-18), and Thompson (R, PA-05) signed a letter to Congressional leadership calling for a delay in the payment cuts for at least two years.

DSH payments provide essential resources to support hospitals that provide crucial community services to vulnerable patient populations. Each state receives an allotment of DSH funds, and payments to hospitals help offset uncompensated care costs from treating low-income patients who are unable to pay for services. The federal DSH allotment during fiscal year (FY) 2017 totaled $616 million for Pennsylvania.

The Affordable Care Act (ACA) reduced federal funding for Medicaid DSH based on the assumption that the ACA insurance expansions would reduce hospital uncompensated care and, therefore, the need for DSH funding.

Thanks to coverage gains, uncompensated care levels have been declining for the last three fiscal years. More patients have access to primary, preventive, and specialty care, and have less of a need for trips to the emergency room. Pennsylvania’s hospitals, however, have not experienced a sufficient decline in uncompensated care to be able to weather the fiscal hardship they face if DSH payments and support for other key health care programs is undermined.

Forty-nine, or 29 percent of hospitals posted a negative total margin during FY 2016, and the Medicaid DSH cuts could force some of them to reduce services—such as trauma, burn care, high-risk neonatal care, and disaster preparedness—or even close their doors for good.

In recognition of the realities facing hospitals, Congress has previously acted to delay the cuts. HAP has urged federal lawmakers to again act to delay impending Medicaid DSH payment cuts, and applauds the bipartisan attention drawn by the recent letter. Although Congress will not have acted by October 1, there is discussion about action on the issue later in the fall.

Please contact Judy A. Miller, director, financial systems analysis, or Laura Stevens Kent, vice president, federal advocacy, with questions pertaining to the DSH program or federal activity.

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