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7 Ways the PPACA Hurts Safety Net Hospitals

Cheryl Clark, for HealthLeaders Media, July 19, 2012

4. Patients with limited payment resources
It almost goes without saying that safety net hospital patients don't pay well. That means available resources must all go to basic services, while ignoring amenities. "Other hospitals spend their money on improving their facilities, hiring more customer service people, better parking and infrastructure," Katz says.

5. Lower Medicaid DSH funds
Under section 2551 of the law, safety net hospitals will lose billions of dollars in federal funds to pay for the uninsured through the Medicaid Disproportionate Share Hospital (DSH) program. The schedule for reducing DSH program funding begins with a $500 million cut in 2014 and accelerates each year through 2020, when the cut is $4 billion.

Before the Supreme Court decision, the cuts were reasonable. Another section of the new law dramatically reduced the number of uninsured by requiring each state to expand its Medicaid eligibility to anyone earning up to 138% of the federal poverty level. If they refused, they would lose all of the federal match, which is usually 50% or more of each state's Medicaid costs. The Supreme Court ruled that unconstitutional, which poses the following problem for safety net hospitals.

6. States can now decline Medicaid expansion
The court's ruling gives states the freedom to not expand their Medicaid coverage programs without losing their entire federal match. And so far, 30 states are seriously considering that option.

That leaves hospitals to care for an estimated 4 million to 13.8 million people who would have been covered. Some say it could be as many as 40 million, if some states tighten eligibility requirements, which some may try to do.

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2 comments on "7 Ways the PPACA Hurts Safety Net Hospitals"


Bulldog (7/20/2012 at 9:19 PM)
1) Unless Republican governors choose to give away Medicaid funds in order to score political points, PPACA is a huge boon for safety net hospitals. Higher reporting requirements are annoying, certainly, as are reward payments that may not capture the challenges of being a safety net hospital, but drastically increased insurance rates are a massive bonus to hospitals that currently provide so much uncompensated care. 2) Mr. Plemmons: I defy you to describe one specific way in which PPACA is a "massive government takeover." Does Medicare not paying for readmissions constitute a takeover? Having insurers compete in state-based exchanges a takeover?

Patrick Plemmons (7/19/2012 at 3:40 PM)
Gee, who knew that a massive government takeover of the healthcare system could have unintended consequences? Someone should alert the AHA, CHA and all the other organizations that sold their constituents down the river in return for more volume. Volume, by the way, that will be under reimbursed, but I guess that was unintended too.