Report: DSH Payment Reductions Could Challenge States and Hospitals
March 14—Forthcoming cuts to Medicaid and Medicare disproportionate share hospital (DSH) payments may lead to credit pressure for states and not-for-profit hospitals, according to a Moody’s Investors Service report.
Reductions called for in the Affordable Care Act (ACA) to DSH payments, estimated to rise to $17 billion annually by 2019, are expected to be covered by the lower cost of charity care. However, the reductions will lead to political and budgetary pressure on state governments as they seek to replace the lost funds, says the Moody’s report, Reduction of Medicaid & Medicare Disproportionate Share Hospital Payments a Looming Challenge for States and Hospitals.
Large urban "safety net" hospitals that typically treat large populations of Medicaid and uninsured patients are most at risk from the DSH phase-out, says Moody’s. Pressures will be greatest in states that opt out of Medicaid expansion and have a high proportion of uninsured residents.
Publication Date: Thursday, March 14, 2013