Safety-net hospital leaders say President Obama's proposal to cut $106 billion in Medicare and Medicaid Disproportionate Share Hospital (DSH) payments over the next 10 years marks a wrong turn on the road to health care reform.
"Those cuts would affect our viability … the lifeline of our institution," says John Bluford, president and CEO of Truman Medical Centers (TMC) in Kansas City, MO.
The DSH proposal would reduce TMC's Medicaid reimbursements by nearly $50 million a year. About half of the patients who enter TMC's doors are Medicaid beneficiaries; nearly 30% of its patients are covered by Medicare.
There are not enough efficiencies for us to make up for the loss in that level of funding," Bluford says. "This is about protecting the safety net and providers who represent the medical homes for hundreds of thousands of patients."
The president on June 13 called for the DSH cuts – a 75% reduction in funding for the programs – as part of a proposal to cut health care spending by $313 billion over 10 years to help finance health reform. Of that amount, some $220 billion would be chopped from hospital funding, including $110 billion in across-the-board "productivity adjustments" to Medicare payment increases.
The AHA last week expressed its "deep disappointment" with the administration's cost-cutting proposal. As part of its efforts to build grassroots opposition to the White House plan, the AHA June 16 sent information to its members detailing how the DSH proposal would affect each hospital’s Medicare funding and each state's Medicaid funding.
"Hospitals have pledged to do our part to help reduce national health costs and we remain committed to doing so," says AHA President and CEO Rich Umbdenstock. "But reform must improve care for patients without crippling hospitals’ ability to care for patients and communities."
Dismantling DSH programs before reform goals are attained would be a serious policy error, say hospital leaders who are engaged in reform efforts to achieve health care savings while promoting better care. Patricia Gabow, M.D., CEO and medical director of Denver Health, a 477-bed public hospital, is part of a provider group called "Health CEOs for Health Reform." The group on June 12 endorsed a set of ideas tied to coordinated care that is intended to save Medicare some $500 billion to $600 billion over 10 years.
"As a safety net institution, we see the results of our failed health care system every day, and therefore we support President Obama's and Congress' effort for major change," Gabow says. "All parts of our system must be willing to embrace different delivery and payment models."
She adds that "as a safety net provider, we understand that the current level of DSH funding may not be needed in the future if everyone has coverage. Currently, DSH funding enables us to deliver $318 million of uncompensated care that is high quality and efficient."
But Gabow doesn’t believe that slashing DSH payments should be part of today's health care reform debate. Her message to lawmakers is that “this critical support should not be decreased until we demonstrate that the burden of uninsured care has been substantially reduced."
TMC's Bluford notes the critical role DSH programs play in supporting a broad range of services for the uninsured, community services and helping safety net providers "make up the shortfall on Medicaid, which is about 60 cents on the dollar in our case."
He agrees with Gabow that when "health reform is in full throttle, DSH dollars will not be needed as much. But until then, we need to transition into this thing slowly because our safety net institutions have all sorts of social disparities they need to support in their communities."
What concerns Ron Anderson, M.D., president and CEO of Dallas-based Parkland Health and Hospital System and an AHA board member, is that policymakers, in the guise of pursuing health care reform, will "weaken hospitals that are dealing with the real infrastructure needs of disenfranchised populations."
About half of Parkland's patients are poor and uninsured, and the proposed Medicaid DSH could be a "fatal blow" for his system, Anderson says.
He urges Congress and the administration to "take a careful look and realize that their safety net providers might be jewels in their own back yards and not worthy of destruction."
