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1 1 (January 16, 2020)

handle is hein.crs/govcaay0001 and id is 1 raw text is: FF.ri E.$~ & Updated January 16, 2020 Medicaid Disproportionate Share Hospital (DSH) Reductions The Medicaid statute requires states to make disproportionate share hospital (DSH) payments to hospitals treating large numbers of low-income patients. This provision is intended to recognize the disadvantaged financial situation of those hospitals because low-income patients are more likely to be uninsured or Medicaid enrollees. Hospitals often do not receive payment for services rendered to uninsured patients, and Medicaid provider payment rates are generally lower than the rates paid by Medicare and private insurance. (See CRS Report R42865, Medicaid Disproportionate Share Hospital Payments.) Whereas most federal Medicaid funding is provided on an open-ended basis, federal Medicaid DSH funding is capped. Each state receives an annual DSH allotment, which is the maximum amount of federal matching funds that each state is permitted to claim for Medicaid DSH payments. In FY2019, federal DSH allotments totaled $12.6 billion. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) has reduced the number of uninsured individuals in the United States through the health insurance coverage provisions (including the ACA Medicaid expansion). Built on the premise that with fewer uninsured individuals there should be less need for Medicaid DSH payments, the ACA included a provision directing the Secretary of the Department of Health and Human Services (HHS) to make aggregate reductions in Medicaid DSH allotments equal to $500 million in FY2014, $600 million in FY2015, $600 million in FY2016, $1.8 billion in FY2017, $5.0 billion in FY2018, $5.6 billion in FY2019, and $4.0 billion in FY2020. Despite the assumption that decreasing the number of uninsured individuals would reduce the need for Medicaid DSH payments, the ACA was written so that, after the specific reductions for FY2014 through FY2020, DSH allotments would have returned to the amounts that states would have received without the enactment of the ACA. In other words, in FY202 1, states' DSH allotments would have rebounded to their pre-ACA-reduced levels, with annual inflation adjustments for FY2014 to FY2021. Since the ACA, a number of laws have amended the ACA Medicaid DSH reductions by eliminating the reductions for FY2014 through FY2019, changing the reduction amounts, and extending the reductions through FY2025. The specific laws that have amended the Medicaid DSH reductions are * the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96); * the American Taxpayer Relief Act of 2012 (P.L. 112- 240); * the Bipartisan Budget Act of 2013 (P.L. 113-67); * the Protecting Access to Medicare Act of 2014 (P.L. 113-93); * the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10); * the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123); * the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 (P.L. 116-59); * the Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019 (P.L. 116-69); and * the Further Consolidated Appropriations Act, 2020 (P.L. 116-94). Under current law, the aggregate reductions to the Medicaid DSH allotments equal $4.0 billion for the period beginning May 23, 2020, and ending September 30, 2020, and $8.0 billion for each year from FY2021 through FY2025. Figure 1 shows estimates of aggregate DSH allotments for FY2012 through FY2028 before the ACA reductions, with the ACA reductions, and under current law. The ACA reductions totaled $18.1 billion, and under current law the DSH allotment reductions total $44.0 billion. Figure I. Total DSH Allotments Before the Reductions, with the ACA Reductions, and Under Current Law $8il ions Before Reductions Current Law FY12 FY15 FY18 FY21 FY24 FY27 FY29 Source: CRS calculation. .O 'T gognpo 'popmm- , goo g , q 'S a X 11LULKWALiN,

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