That sigh of relief you heard Monday was from hospital administrators in nearly two dozen states, including Florida and Texas.
That’s because the Obama administration announced that for the next two years, it doesn’t plan to penalize states that have yet to expand Medicaid coverage under the federal health law by targeting them for reduced Medicaid funding, according to a proposed rule unveiled Monday. That money goes to hospitals that treat large numbers of poor people.
The health law is funded in part by a gradual reduction in extra Medicaid payments, called disproportionate share hospital, or DSH. Those payments help hospitals that care for a large proportion of poor patients who are covered by Medicaid, or who are uninsured.
The hospital industry agreed to the cuts during the negotiations over the law on the assumption that expanding coverage to many people who are now uninsured would mean that hospitals would give away less uncompensated care. But since the Supreme Court made the Medicaid expansion voluntary last year, hospitals fear they will lose Medicaid money while at the same time seeing little or no reduction in how much they spend on uncompensated care.
The HHS secretary must come up with a formula that imposes the sharpest cuts on states with the lowest levels of uncompensated care.