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U.S. House Passes CHIP Bill; Includes Two-Year Delay to DSH Cuts

November 03, 2017

The U.S. House of Representatives passed legislation that would extend funding for the Children’s Health Insurance Program (CHIP) for five years and provide a two-year delay to Medicaid Disproportionate Share Hospital (DSH) payment cuts.

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

The House legislation—H.R. 3922, CHAMPIONING HEALTHY KIDS Act—would extend CHIP funding for five years, through fiscal year (FY) 2022. The CHIP language in the House bill mirrors a bipartisan deal agreed to in the U.S. Senate. 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.

Partisan controversy emerged with respect to policies that would offset the cost of extending funding for CHIP and other health programs.  The bill passed the House by a vote of 242 to 174, largely along partisan lines.

The Senate Finance Committee approved bipartisan legislation—S. 1827, the Keeping Kids’ Insurance Dependable and Secure (KIDS) Act—by voice vote, but have not yet considered the legislation on the Senate floor.

In addition to funding CHIP, the bill extend funding for Community Health Centers for two years and delays Medicaid DSH cuts for fiscal years 2018 and 2019. 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 $5 billion over the next two years, growing to $8 billion in 2024.

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.

Pennsylvania lawmakers have placed a priority on both delaying DSH cuts and extending CHIP. Eight Pennsylvania lawmakers signed on to a letter to Congressional leadership calling for a delay in Medicaid DSH payment cuts for at least two years, and 17 members of the Pennsylvania Congressional delegation joined a letter urging swift action to extend federal funding for CHIP.

HAP has advocated for the enactment of legislation to extend CHIP funding that supports more than 176,000 Pennsylvania children in accessing affordable, comprehensive health care coverage; and preservation of essential Medicaid DSH payments.

The Senate has not signaled if it will take up the House-passed legislation. The issues addressed in the bill could be rolled into an end-of-the-year package in December.

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

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