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AHA weighs in on DSH funding rule and makes its case for two-year delay in cuts

July 12, 2013

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The AHA responded favorably to how the Centers for Medicare & Medicaid Services (CMS) proposed to reduce federal Medicaid disproportionate- share hospital (DSH) allotments, as it is required to under the “Patient Protection and Affordable Care Act” (ACA).

In July 2 comments on the DSH regulations, AHA Executive Vice President Rick Pollack wrote that the association “appreciates CMS’ overall approach to implementing the ACA’s Medicaid DSH allotments reductions.” The health care law mandates cuts in DSH funding of $500 million in fiscal year (FY) 2014 and $600 million in FY 2015.

Pollack said the agency’s May 13 proposed methodology for reducing DSH “would not discourage Medicaid expansion, nor would it cause undue harm to hospitals in states that have decided not to expand or in states that have
yet to decide to expand their Medicaid program.”

The comment letter also expressed support for the proposal’s weighing factors and data sources. The proposal gives one-third weight to the uninsured percentage factor and one-third weight to each of the two DSH payment targeting factors: high Medicaid volume hospitals and hospitals with high volumes of uncompensated care.

The AHA said the proposed rule’s twoyear time frame for applying the DSH allotments would “allow CMS, states and stakeholders more time to fully assess CMS’ approach and explore opportunities for coverage expansion.” The AHA urged CMS to engage providers in future changes to its methodology prior to formal rulemaking and be “as transparent as possible on the issues regarding data refinement and methodology improvements.”

Delaying the DSH cuts. In its letter, the AHA also expressed strong support for the “DSH Reduction Relief Act,” H.R. 1920, which would delay for two years cuts to the Medicare and Medicaid DSH programs.

More than 40 House lawmakers support H.R. 1920 (see Hill Head Count on this page). In a July 8 “AHA Legislative Alert,” the association called on hospital leaders to contact their members of Congress and urge them to support the “DSH Reduction Relief Act.”

Delaying the DSH payment cuts is a key priority for the AHA and hospital leaders as the field weighs the impact of the ACA’s lower coverage estimates resulting from the Supreme Court’s 2012 decision that allows states to opt out of Medicaid expansion.

The ACA assumed some 32 million people would get health care coverage under the law, according to Congressional Budget Office (CBO) estimates. As a result of the court’s ruling and the uncertainty of gains in coverage through the new health insurance marketplaces, CBO revised those estimates downward to coverage for 25 million people, the AHA noted in its comments on the proposed DSH rule.

“For hospitals treating a disproportionate share of these patients, they will see their payments reduced in ways unintended by policymakers,” the AHA told CMS. “The two-year delay of DSH reductions proposed in H.R.

1920 would allow health coverage expansions [under the health care law] to be more fully realized.”

For more on the AHA’s letter, click on: http://tinyurl.com/mnc83zq.