Sept. 16—A final rule specifies how $18 billion in Medicaid cuts will occur for hospitals serving many low-income patients.

The final rule from the Centers for Medicare & Medicaid Services (CMS) was issued Sept. 13. It describes how the agency will reduce Medicaid disproportionate share hospital (DSH) payments for FY14 and FY15.

Cuts in the payments, which are provided to help hospitals that treat large numbers of low-income and uninsured patients, are mandatory under the Affordable Care Act. The law required $18.1 billion in Medicaid DSH reductions from FY14 to FY20 to help offset increased spending elsewhere in the law. Additionally, the law’s supporters said hospitals are less likely to need the assistance, since the law’s other provisions are expected to reduce the number of uninsured by about 30 million people.

The final rule differed little from proposed rules implementing the cuts that CMS issued in May. It includes a reduction methodology only for FY14 and FY15. CMS plans to revisit the way it calculates Medicaid DSH payments and issue new rules in 2016 and beyond. A total of $1.1 billion in DSH cuts will occur over the next two years—including $500 million in FY14 and 600 million in FY15, according to a CMS fact sheet.

Hospitals have urged a reduction in the DSH cuts because up to half of the states have rejected the related Medicaid expansion for a variety of reasons, including concerns about the sustainability of long-term federal assistance.

Publication Date: Monday, September 16, 2013