Medicaid Funding: Hospital Seeking for 14th Extension from Congress

In the political landscape of Washington, the sight of hospital lobbyists swarming the Capitol has become as common as the blooming cherry blossoms in spring. 

Their mission: to urge lawmakers to delay billions of dollars in Medicaid funding cuts, which were originally prescribed by the Affordable Care Act (ACA) and agreed upon by industry leaders years ago. 

This year, the fate of these cuts once again hangs in the balance, as Congress faces pressure from the hospital industry to postpone them once more.

Since 2013, Congress has voted a staggering 13 times to delay these Medicaid funding reductions, consistently siding with hospitals’ claims that such cuts would hinder the delivery of care. 

As the clock ticks closer to October, the deadline for congressional action, the federal government is poised to cut $8 billion from this year’s budget. 

This cut will be repeated annually for the next three years, affecting a Medicaid program aimed at supporting safety-net facilities that cater to a significant share of Medicaid and uninsured patients.

 In 2021 alone, the program’s spending reached approximately $19 billion.

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Medicaid Disproportionate Share Hospital (DSH) Payments Program

In the political landscape of Washington, the sight of hospital lobbyists swarming the Capitol has become as common as the blooming cherry blossoms in spring.

The program under scrutiny is known as the Medicaid Disproportionate Share Hospital (DSH) payments program.

 Despite its noble intention to assist safety-net hospitals, criticism has arisen due to evidence that a significant portion of its funding benefits hospitals that do not primarily serve low-income patients.

More than 2,500 hospitals, or nearly 40% of all hospitals in the United States, reportedly get these payments, according to industry associations.

To understand the roots of this ongoing debate, one must look back 14 years ago when the ACA was teetering on the edge of existence. 

The hospital industry struck a deal, accepting $155 billion in Medicare and Medicaid funding cuts over a decade, banking on the promise that increased insurance coverage under the ACA would bolster their bottom lines. 

A portion of these cuts was directed at Medicaid DSH payments.

The hospital sector claims that now is not the time for additional cuts, despite significant declines in the uninsured rate and record-high hospital profits.

They point to the lingering impact of the COVID-19 pandemic and the millions of people losing Medicaid coverage as pandemic-era protections come to an end.

Critics argue that hospitals should fulfill their side of the deal made with the Obama administration in 2009.

They point out that the hospital industry often increases prices, sues patients for lack of payment, and pays top executives large salaries while evading responsibilities mandated by the ACA. 

The agreement was a critical part of keeping national health reform legislation on track, leading to the eventual signing of the ACA into law.

The Medicaid DSH payments program has long been the subject of controversy. Critics highlight that a substantial share of the payments does not reach safety-net hospitals as intended.

A study revealed that 57% of hospitals received DSH payments in 2015, but about 6% of the recipient hospitals did not cater primarily to low-income populations.

Furthermore, the formula determining how much money states receive is based on historical Medicaid spending totals, leading to some states receiving significant supplemental funding despite having low uninsured rates.

As the clock ticks toward the October deadline, hospitals and their lobbyists continue to fight to postpone the Medicaid funding cuts. 

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Source: KFFHealth News

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