Senate Scraps Medicaid DSH Cuts in Latest Build Back Better Act

An updated Build Back Better Act from the Senate Finance Committee does not include provisions that would reduce Medicaid Disproportionate Share Hospital (DSH) payments. A previous version of the bill passed by the House would have cut federal Medicaid DSH allotments in states that have yet to expand Medicaid.

To date, 12 states have not expanded Medicaid under the authority of the Affordable Care Act. The American Hospital Association (AHA), which urged lawmakers to scrap the Medicaid DSH cuts, estimated that the reductions in federal funding would have totaled approximately $4.7 billion over ten years.

The Medicaid DSH program provides supplemental payments to hospitals that serve a disproportionate share of Medicaid and uninsured individuals. The payments are designed to support the delivery of care for these individuals and are funded through an annual allotment from the federal government.

Although the Senate Finance Committee nixed the Medicaid DSH cuts, the group of lawmakers did keep a provision that would limit federal funding for uncompensated care pools in non-Medicaid expansion states.

“The Finance Committee has made targeted improvements to the Build Back Better Act, and is ready to move forward in this process,”  Senate Finance Committee Chair Ron Wyden (D-OR), said in a press release. “Our package is historic. It would create good-paying jobs, lower the cost of raising a family, combat the climate crisis and reduce energy bills, build more affordable housing, and cut [healthcare] costs for families and seniors.”

Hospital groups have lobbied Congress to remove Medicaid DSH cuts from the Build Back Better Act.

“While we appreciate the goal of increasing coverage to residents in states that did not expand their Medicaid programs through the Affordable Care Act (ACA), it should not come at the expense of vital funding to facilities located in those parts of the country, especially at a time when hospitals are still providing care due to the COVID-19 pandemic and the deadly Delta variant,” the AHA and seven other national hospital organizations wrote to Congressional leaders in November.

Senators from Georgia also petitioned top Democratic members of Congress last month to remove the Medicaid DSH cuts from the legislative package. Georgia hospitals would have seen a 12.5 percent reduction in federal Medicaid DSH funding, the Senators reported.

“The DSH program assists hospitals that serve a high Medicaid and uncompensated care population and is meant to support hospitals for treating the most vulnerable patients,” the lawmakers wrote.

“Reducing federal funds to hospitals and providers can be detrimental to their survival, and in the midst of a global pandemic, we should not be imposing additional financial constraints. It is critical that we do everything we can to support our providers and ensure they are able to provide the best care to patients across this country. A reduction in DSH could jeopardize their ability to provide such care.”

The Build Back Better Act contains several healthcare provisions. Among those provisions is one that would temporarily close a Medicaid coverage gap in non-expansion states by providing subsidized coverage through the federal health insurance marketplace for low-income individuals. The Act also seeks to expand eligibility for health insurance marketplace subsidies as authorized by the American Rescue Plan Act through 2025.

Other healthcare provisions include expanding Medicare benefits for hearing care, ensuring Medicaid coverage for pregnant and postpartum people, premium assistance through state-run reinsurance programs, and proposals to lower prescription drug costs.

Senate Democrats hope to pass the billing before the holiday recess. Although, some Senators, including Joe Manchin (D-WV), have reservations about the $1.7 trillion spending package.