Pediatric hospitals hit hard by ACA payment reductions

Anticipating a plunge in the number of uninsured patients, the framers of the Affordable Care Act reduced disproportionate-share (DSH) payments to hospitals serving outsized indigent and Medicaid populations. A recent crunch of the numbers shows the cuts are placing particular pains on children’s hospitals.

In a research letter posted online Dec. 28 in JAMA Pediatrics, Jeffrey Colvin, MD, JD, of the University of Missouri, and colleagues lay out findings showing that, among other hits, pediatric hospitals face bruising readmission penalties due to their significantly elevated percentages of high-illness-severity and complex-disease discharges.

More pressing still, the authors project that there will not be major decreases in the number of uninsured children, as few children were uninsured to begin with.

Most kids have been, and still are, covered by Medicaid—and all hospitals are dealing with Medicaid shortfalls.

“The loss of DSH payments may not be matched by reductions in financial losses from decreases in the number of uninsured patients,” Colvin et al. explain in their study overview.

The research team analyzed around 1.2 million discharges of patients under 18 years old from 2,207 hospitals in 26 states.

They found that, while children’s hospitals represented just 3.4 percent of all hospitals in the study group, these institutions accounted for 32.4 percent of the lowest household-income populations, 33.8 percent of Medicaid recipients and 42.5 percent of patients with the highest severity of health conditions.

The relatively few children’s hospitals also cared for more than half, 52.8 percent, of patients with complex chronic conditions.

Consistent with this, some 41 percent (78,408 children) discharged from a freestanding children’s hospital had a complex chronic condition, and 43 percent (172,230) were children in the highest illness severity category.

Overall, Colvin and team found, non-children’s teaching hospitals were the most common hospital type for patients with Medicaid, those with the lowest household income and those with the highest severity of health conditions.

However, the per-hospital burden of discharges in those categories was much greater for children’s hospitals, they write in their study discussion.

“Children’s hospitals may face disproportionate financial risk from the ACA,” the authors conclude. “Reductions in DSH payments may disproportionately affect children’s hospitals because of their high per-hospital number of Medicaid discharges. In addition, readmission penalties may disproportionately affect children’s hospitals because of their elevated percentage of high-illness-severity and complex disease discharges.”