Hospitals urge Congress to prevent $8B in Medicaid DSH cuts

By Alan Condon / March 7, 2023

Nine national groups representing hospitals and health systems — including the American Hospital Association and the Federation of American Hospitals — have urged Congress to address Medicaid disproportionate share hospital cuts, scheduled to begin in fiscal year 2024.

Under the current statute, hospitals are facing $8 billion in reductions beginning Oct. 1, according to hospital stakeholders. 

The Medicaid DSH program assists hospitals that provide care to high numbers of Medicaid and uninsured patients. More than 2,500 hospitals receive DSH payments to address Medicaid underpayment and uncompensated care to ensure patients have access to critical community services.

The ACA reduced Medicaid DSH payments under the assumption that uncompensated care costs would decrease as healthcare coverage increased, but the coverage rates envisioned under the ACA have not been fully realized, and tens of millions of Americans remain uninsured, according to the hospital groups.

"This year the Medicaid program and its beneficiaries face a difficult transition, as states institute processes to determine which recipients remain eligible for the program when the maintenance of effort provisions related to the public health emergency expire," stakeholders wrote in the March 6 letter to Congress. "In addition, Medicaid underpayment continues to pose ongoing financial challenges for hospitals treating our nation's most vulnerable citizens, including millions of children. Now is not the time for additional cuts to Medicaid funding, as hospitals are facing continued financial hardships while the country emerges from the COVID-19 pandemic."

The hospital groups asked Congress to delay the Medicaid DSH cuts to protect access to care for some of the country's most vulnerable patients.