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Drying the DSHs

I was asked an interesting question last week when giving a presentation to Baylor College of Medicine’s Emergency Medicine Residency program. As a program housed in a public hospital that sees a lot of uncompensated care, places such as Ben Taub (Harris County Hospital District) stand to lose a significant amount of financial support as DSH payments get cut in the coming years. This was under the assumption that Medicaid would provide financial support as states expand their eligibility. However in Texas, where, Ben Taub stands to lose DSH funding without an accompanying rise in Medicaid compensation.

The question then: “Will DSH payments still go down in places that don’t take the Medicaid expansion like Texas?”

Source: Malay Maniar (Flickr/CC)

Source: Malay Maniar (Flickr/CC)

It seems that DSH funds will dry up over time despite the fact that some states may opt out of the Medicaid expansion. It really rests on how HHS determines their allocation formula in the coming years.

According to an Academy Health brief:

“The ACA directs the secretary of HHS to develop a new method to reduce DSH funds from 2014 to 2020. Currently, the levels of DSH funding and the purposes for which it is used differ considerably among states. Presumably, in developing a reduction methodology, HHS will study the current distribution and use of funds. Some providers have suggested that rather than cutting DSH payments on the assumption that revenue will increase, the reductions should occur only after a decline in the demand for uncompensated costs can be measured and verified.”

From the Kaiser Family Foundation:

“Reduce aggregate Medicaid DSH allotments by $.5 billion in 2014, $.6 billion in 2015, $.6 billion in 2016, $1.8 billion in 2017, $5 billion in 2018, $5.6 billion in 2019, and $4 billion in 2020. Require the Secretary to develop a methodology to distribute the DSH reductions in a manner that imposes the largest reduction in DSH allotments for states with the lowest percentage of uninsured or those that do not target DSH payments, imposes smaller reductions for low-DSH states, and accounts for DSH allotments used for 1115 waivers.”

From the National Association of Public Hospitals and Health Systems:

“[T]he secretary should establish safety net financing policy, through the DSH health reform methodology, that would support and ensure funding for core safety net missions such as providing uncompensated care to un- and underinsured patients, training tomorrow’s health care workforce, and providing essential community services such as trauma and burn care.”

Lastly, from the best health wonk reporter in the nation (per my opinion), Sarah Kliff at the Washington Post:

 “That money goes away, regardless of whether Texas decides to join the Medicaid expansion or not. Those dollars could be replaced with new Medicaid payments – or, if not, it will be about a $1 billion in new bills for Texas hospitals to foot.”


If anyone else has better or more up to date info on this issue, please feel free to comment.


Cedric Dark, MD, MPH, FACEP
About Cedric Dark, MD, MPH, FACEP

Cedric Dark, MD, MPH, FACEP is Founder and Executive Editor of Policy Prescriptions®. A summa cum laude graduate of Morehouse College, Dr. Dark earned his medical degree from New York University School of Medicine. He holds a master’s degree from the Mailman School of Public Health at Columbia University. He completed his residency training at George Washington University. Currently, Dr. Dark is an Assistant Professor in the Department of Emergency Medicine and a Health Policy Scholar in the Center for Medical Ethics & Health Policy at Baylor College of Medicine. He produces a health policy podcast for the American Academy of Emergency Medicine. Dr. Dark’s commentary and opinions on this website are his own and do not represent the views of Baylor College of Medicine or the American Academy of Emergency Medicine. Contact: Website | Facebook | Twitter | Google+ | YouTube | More Posts

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