Dear Majority Leader McConnell, Minority Leader Schumer, Speaker Ryan, and Democratic Leader Pelosi,
As Congress continues to consider important health care legislation, we write to you about an urgent matter requiring immediate attention -- the impending cuts to the Medicaid Disproportionate Share (DSH) program scheduled to take effect October 1, 2017 (FY 2018). We ask you to make the elimination of these harmful cuts a priority of the highest order.
The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) reduced federal funding for Medicaid disproportionate share hospital (DSH) payments under the assumption that hospital uncompensated care costs would decline as insurance coverage increased. Uncompensated care continues to burden safety-net hospitals, and as a result, Congress has previously, on a bipartisan basis, delayed the reductions several times. However, federal DSH payments are slated to be reduced by $2 billion in fiscal year (FY) 2018. In total, the Medicaid DSH cuts will equal $43 billion through FY 2025.
The Medicaid DSH program is intended to recognize the disadvantaged financial situation of hospitals who serve low-income and uninsured patients, and to help ensure these hospitals can continue serving Medicaid patients. DSH payments help offset hospitals' uncompensated care costs and are absolutely vital for the continued ability of safety net hospitals to care for our nation's most needy populations. The looming Medicaid DSH cuts will impact every aspect of health care delivery and will have a disproportionate and devastating impact on hospitals that serve a higher than average proportion of low-income, Medicaid, and uninsured patients. These safety-net hospitals provide life-saving and essential access to health care while operating in low-margin environments with high uncompensated care costs. The size of the cuts envisioned will severely and negatively impact access to health care in the most vulnerable communities across the country.
Eliminating the prospect of the harmful DSH cuts will bring more certainty to the health care landscape and help ensure that safety-net hospitals will be able to continue providing access to the highest quality care for low income families, Medicaid beneficiaries, the uninsured, and the indigent.