- CMS on Monday finalized a rule with cuts to disproportionate share hospitals as classified under Medicaid that would reach $4 billion next year and $8 billion a year through 2025.
- The cuts are scheduled to go into effect next month, but Congress could delay them. The House, in its continuing resolution to fund the government last week, voted to put off the changes and the Senate is expected to consider that legislation this week.
- The final rule mostly follows the proposed rule on the cuts, which CMS issued in July 2017. It adds, however, a state-specific cap on allotment reductions at 90% of the original allocation for that fiscal year.
The DSH cuts were part of a trade off for hospitals under the Affordable Care Act, as they were expected to receive more patients as more people obtained health insurance through the landmark law's provisions. Not all states have expanded Medicaid under the act, however, and coverage gains have shown signs of eroding as the Trump administration has rolled back many of its efforts.
Hospitals, have argued CMS' proposed cuts are therefore too steep and have managed to get them delayed. They sued to stop the change in reimbursement, the first since 1992, but the U.S. Court of Appeals for the District of Columbia ruled last month CMS acted within its authority.
America's Essential Hospitals, which represents safety net facilities, has said the cuts would leave member hospitals unable to provide needed care. "We cannot overstate the threat this cut poses to healthcare access and to hospitals that care for low-income and other vulnerable patients," the group said in a previous statement. "Growth in Medicaid shortfall — reimbursement that fails to cover cost — has been larger than the projected decline in uncompensated care under the Affordable Care Act. This finding undermines the very premise of the cuts: that ACA coverage expansion would lessen the need for DSH funding."
DSH hospitals did win a court victory when the U.S. Supreme Court ruled in June a formula change for calculating their Medicare reimbursement had unlawfully skirted a notice and comment period.