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Analysis

Senate Joins House to Pass Temporary Delay of $4B DSH Cuts

By Jack O'Brien  
   September 26, 2019

The delay, included in a larger continuing appropriations bill, now moves to President Donald Trump's desk.

The Senate passed a continuing resolution (CR) to fund the federal government through November 21, temporarily delaying $4 billion in payment reductions to disproportionate share hospitals (DSH).

The upper chamber of Congress approved the measure in a 82-15 vote, one week after the House voted 301-123 in favor of the CR. 

President Donald Trump, who indicated earlier this week that he supports the stopgap measure, is likely to sign the CR and temporarily delay major cuts to DSHs nationwide for at least two years.

Related: Medicaid DSH Payments Cover Majority of Uncompensated Care Costs

On Tuesday, the Centers for Medicare & Medicaid Services (CMS) released its final rule for instituting $4 billion in cuts to DSHs at the start of fiscal year 2020, which is October 1. CMS first introduced these cuts in 2017 and has received significant push-back from DSH advocates since.

Congress' actions this week were welcomed by America's Essential Hospitals (AEH), who urged Trump to sign the bill quickly while calling on the Senate to institute a permanent repeal of the cuts.

"The trajectory of the cuts — $44 billion over six years — simply would be unsustainable for essential hospitals, which already operate with no or narrow margins and high levels of uncompensated care," Bruce Siegel, MD, MPH, CEO of AEH, said in a statement.

Earlier this month, Senate Minority Leader Chuck Schumer, D-N.Y., visited a DSH hospital in upstate New York to sound the alarm about potential cuts from CMS.

Last summer, nine DSH hospitals sued the Department of Health and Human Services (HHS) over the cuts, which made its way up to the Supreme Court for oral hearings in January.

Ultimately, the Court sided with the plaintiffs in a 7-1 ruling, affirming a 2017 D.C. Circuit Court ruling that HHS had violated the Medicare Act by modifying the reimbursement formula without going through a standard public notice-and-comment period. 

In mid-August, the D.C. Circuit Court overturned a lower court ruling and sided with the Trump administration, reinstating a 2017 rule that changes how DSH hospitals are compensated for taking on lower-income patients. 

The ruling is estimated by HHS to affect about $3.4 billion in payments.

Related: D.C. Circuit Court Reinstates 2017 DSH Payments Rule

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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