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Cuts to Medicare Payments for Uninsured Begin

Chelsea Rice, for HealthLeaders Media, October 1, 2013

"Any legislation at all around healthcare is just toxic. There's very little that both sides agree on."

America's Essential Hospitals is advocating for Congress to delay DSH payment cuts for three years, as well as realign the reimbursement formula to be more "evidence-based" or more accurately reflect the reality of uncompensated care at each state.

In 2010, the average hospital margin of America's Essential Hospitals members was 7%. For the nation's largest urban hospitals, the proposed DSH payment cuts would put their 2% profit margin closer to -7%, AEH calculates.

Medicaid DSH payments to hospitals in FY 2014 and 2015 will be allocated based on data that predates state decisions on Medicaid expansion, according to the May 2013 CMS rule on DSH allotment reductions. According to CMS data, 10.8 million Americans reside in states where Medicaid is currently not planned to be expanded by 2014. By 2014, 8.7 million new beneficiaries are expected to enroll in Medicaid.

The reductions will more heavily impact states that don't direct DSH payments to hospitals with high volumes of Medicaid patients and uncompensated care. Reductions will also more greatly impact states with lowest percentages of uninsured.

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