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CHIP Funding Bills Advance; Delay to DSH Cuts Under Consideration

October 04, 2017

The U.S. Senate Finance Committee and the U.S. House Energy & Commerce Committee separately worked to advance legislation that would extend funding for the Children’s Health Insurance Program (CHIP). The House legislation also would provide a one-year delay to impending Medicaid Disproportionate Share Hospital (DSH) payment cuts.

Addressing both policy issues—CHIP and DSH—is crucial to maintaining access to health insurance coverage and care for Pennsylvania patients.

CHIP funding expired on September 30, 2017. Pennsylvania is projected to run out of resources for CHIP during February 2018, if Congress does not act.

In the absence of Congressional action, resources provided through the DSH program, which support hospitals that serve a high proportion of Medicaid and uninsured patients, will be cut by $2 billion starting October 1, 2017, growing to $8 billion by 2024.

The Senate Finance Committee approved bipartisan legislation—S. 1827, the Keeping Kids’ Insurance Dependable and Secure (KIDS) Act—by voice vote. The legislation would extend CHIP funding for five years, through fiscal year (FY) 2022. Under the bipartisan deal, the current enhanced federal matching rate provided to states would be maintained for two years and phased down starting in FY 2020.

During the committee mark-up, Senators cited their interest in addressing the Medicaid DSH cuts, and pledged to act to extend key Medicare policies such as the Medicare-Dependent Hospital program and Low-Volume Adjustment.

The House Energy & Commerce Committee considered the Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable (HEALTHY KIDS) Act of 2017. That legislation mirrors the Senate bill in providing a five-year reauthorization of funding that scales down the matching rate. The bill would also extend funding for Community Health Centers for two years.

Partisan controversy emerged with respect to policies that would offset the cost of extending funding for CHIP and other health programs.

Of importance to the hospital community, the House bill would eliminate $2 billion in reductions for DSH allotments for FY 2018. However, it would offset the cost of the policy by extending DSH reductions through FY 2026 and FY 2027 at $8 billion each year.

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. The federal DSH allotment in FY 2017 totaled $616 million for Pennsylvania.

Last week, Pennsylvania Congressmen Bob Brady (D, PA-01), Brendan Boyle (D, PA-13), Charlie Dent (R, PA-15), Mike Doyle (D, PA-14), Dwight Evans (D, PA-02) Brian Fitzpatrick (R, PA-08), Tim Murphy (R, PA-18), and GT Thompson (R, PA-05) joined 213 colleagues in signing on to a letter to Congressional leadership calling for a delay in Medicaid DSH payment cuts for at least two years.

Congressman Glenn ‘GT’ Thompson (R, PA-05) led a letter last week, co-signed by 17 members of the Pennsylvania Congressional delegation, urging swift action to extend federal funding for CHIP.

HAP urges federal lawmakers to come to a bicameral policy resolution that will extend CHIP funding that supports more than 176,000 Pennsylvania children in accessing affordable, comprehensive health care coverage; and preserve essential Medicaid DSH payments.

HAP will keep members advised of federal developments about each of these policy priorities. Please contact Laura Stevens Kent, HAP's vice president, federal advocacy, with questions.

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