The American Hospital Association (AHA) supports the Supporting Safety Net Hospitals Act (H.R. 2665), which would delay cuts to Medicaid Disproportionate Share Hospitals (DSH) for two years. These cuts were originally passed as part of the Affordable Care Act with the expectation that coverage levels would increase, but they have not. Safety net hospitals that serve low-income and uninsured patients depend on DSH payments to cover the costs of uncompensated care. The Supporting Safety Net Hospitals Act would provide temporary relief and allow time for Congress to consider broader reforms to the Medicaid DSH program.
The American Hospital Association (AHA) recently announced its support for the Supporting Safety Net Hospitals Act (H.R. 2665), a bipartisan piece of legislation that would postpone for two years the scheduled cuts to Medicaid Disproportionate Share Hospitals (DSH) starting from October 1. The Medicaid DSH program is aimed at providing financial assistance to hospitals serving a disproportionate number of low-income patients, to ensure that both Medicaid and uninsured patients have access to healthcare services. In case Congress fails to take action, reductions of up to $8 billion will be implemented for the fiscal year 2024.
The AHA, in its statement, wrote that reductions to the Medicaid DSH program were originally passed as part of the Affordable Care Act (ACA), with the rationale that hospitals would experience a decrease in uncompensated care as health insurance coverage increased. However, the predicted coverage levels have not materialized, and hospitals continue to care for patients without receiving payment. Moreover, the redetermination process that begins on April 1 may lead to additional individuals becoming uninsured as states decide who remains eligible for the Medicaid program.
This bill is critical because safety net hospitals have an important role in providing healthcare to vulnerable populations, such as those with low income, disabilities, or limited English proficiency. These populations typically have higher rates of chronic health conditions and are more likely to use emergency department services compared to the general population. Thus, safety net hospitals play a crucial role in reducing healthcare disparities and ensuring that everyone has access to healthcare services regardless of their financial status.
The Medicaid DSH program was established to address the financial challenges that safety net hospitals face when serving Medicaid and uninsured patients. DSH payments are designed to help hospitals cover the costs of uncompensated care that they provide to low-income patients who are uninsured or underinsured. However, the ACA aimed to reduce the number of uninsured individuals by expanding Medicaid coverage and providing subsidies to help individuals purchase private health insurance.
The ACA’s efforts to expand insurance coverage have been successful to some extent. However, the coverage gains have not been as high as expected, particularly in states that chose not to expand their Medicaid programs.
According to the National Center for Health Statistics, the uninsured rate for adults aged 18-64 increased from 11.3% in 2016 to 12.5% in 2018. In 2018, an estimated 27.5 million non-elderly individuals were uninsured.
Safety net hospitals are among the institutions most affected by the increase in the uninsured rate. These hospitals typically serve a high volume of uninsured patients, and DSH payments are essential in helping them cover the costs of uncompensated care. Without DSH payments, safety net hospitals would experience significant financial strain, which could result in reduced access to care for low-income patients and increased healthcare disparities.
The Supporting Safety Net Hospitals Act would delay the scheduled reductions to Medicaid DSH payments for two years, providing temporary relief to safety net hospitals. The delay would give hospitals more time to adjust to the ACA’s coverage expansions and to develop alternative sources of revenue to replace DSH payments. The bill would also give Congress time to consider broader reforms to the Medicaid DSH program, which could include changes to the DSH formula or the allocation of DSH funds.
