CMS asked to delay cuts to Medicaid DSH payments

The American Hospital Association (AHA) and dozens of doctors and hospitals have asked CMS to delay proposed cuts to Medicaid disproportionate share hospital (DSH) payments, arguing reductions would hamper safety-net hospitals and criticizing how the payments would be calculated.

After several years of delays, CMS proposed last month moving forward with $43 billion in Medicaid DSH cuts between 2018 and 2025, beginning with a $2 billion reduction next year. The reduced allotments would be based on some new data sources under the proposed rule, forming what the agency called the DSH Health Reform Methodology (DHRM). The DHRM would then generate a state-specific reduction which “would be applied to the unreduced DSH allotment amount for its respective state.” How a state manages those reductions, the rule said, is largely up to them.

The DHRM would be based on three factors: the percent of uninsured in a state, how well the state targets payments to hospitals with higher uncompensated care costs as well as those with high volumes of Medicaid inpatient utilization. That last factor concerned the AHA, because Medicaid inpatient utilization rates aren’t publicly available.

“This lack of transparency significantly hampers state governments’ and stakeholders’ ability to assess how the DHRM will affect their state DSH allotment, particularly for FY 2018, the first year of the ACA allotment reductions,” the AHA wrote in its comments to CMS Administrator Seema Verma, MPH.

The AHA also took issue with the age of some of the data to be used in the DHRM. The hospital targeting components would rely on Medicaid DSH audit data from 2013, which may not reflect levels of uncompensated care hospital experience now. With the DHRM having to rely on old and publicly unavailable data, the AHA urged CMS to delay the DSH cuts until those underlying figures are evaluated.

Many of the comments received by CMS about the proposed rule came from New York, which would lose an estimated $329 million, the most of any state, if the cuts are enacted. The concerns mostly dealt with how such a steep reduction would hamper efforts to serve low-income patients, including those addicted to opioids.

“The loss of DSH funds will severely impair our ability to provide for the neediest of our community members and disable a hospital which is dedicated to its safety-net function,” wrote Leslie Kohman, MD, a SUNY distinguished service professor of surgery and director of outreach at Upstate Cancer Center in Syracuse, N.Y. “New York expanded Medicaid coverage, and many more of our patients are thus ‘insured.’ However, we still care for a significant population of the uninsured and underinsured and our dedicated physicians and staff want to continue to provide this care to all who need it.”