Wednesday, December 19, 2012

Medicaid Expansion, Disproportionate Share Hospital Payments, and a Train Wreck Waiting to Happen. Information Bulletin #367 (12/12). The Affordable Care Act has many pieces. Some of the pieces are interdependent. This Information Bulletin deals with two of those pieces to explain their interdependence and why it is important to you. When Congress enacted the Affordable Care Act in 2010, one provision (Medicaid Expansion) required Medicaid be provided to people who had not been previously eligible and whose incomes were under 133% of the federal poverty level, about $14,856 for a single person and $30,657 for a family of four. This mandatory Medicaid Expansion would have impacted approximately 21.3 million low-income people nationwide, beginning in January 2014. Another provision of the Affordable Care Act significantly reduced what was known as Medicaid payments to “Disproportionate Share Hospitals” (DSH). These were federal Medicaid reimbursements made annually to States for those hospitals that provided a significant amount of health care and service to many persons whose incomes had placed them above Medicaid, but who did not have private health insurance. At least 51% of these payments will be eliminated under the ACA by 2019. Medicaid DSH payments pretty much covered the same 21.3 million people Medicaid Expansion was intended to have covered. In 2010, when Congress enacted the ACA, Medicaid Expansion would have been mandatory on the States. The States would have had to provide Medicaid to the 21.3 million people. In return, the federal government would have paid 100% coverage of the costs of the 21.3 million for the first three year years and about 90% for the next three years. Mandatory Medicaid Expansion has virtually no incremental cost to the States. It has been estimated that between 2013 and 2012the federal share of the expansion to all States would be $800 billion and the States’ share $8 billion. Here’s how the DSH and the mandatory Medicaid Expansion were intended to be interdependent. With the enactment of the ACA, these 21.3 million people would have become Medicaid recipients and would have received services and care from the hospitals, which would then not need to have been reimbursed with DSH payments. As regular Medicaid recipients, no DSH reimbursement would have been necessary because States and then hospitals would have received direct Medicaid hospital reimbursement for these 21.3 million people. Then came the 2012 U.S. Supreme Court decision that held that Congress could not require States to implement Medicaid Expansion (even though it would cost the States virtually no State funds). What the Court did not deal with was that ACA had virtually eliminated DSH payments. Lo and behold – your hospitals can get royally shafted if your State does not opt to participate in the Medicaid Expansion. How? The States and then the hospitals will not receive either the DSH payments for these 21.3 million people that they had received prior to the ACA. If a State does not opt for Medicaid Expansion, these same 21.3 million people will still go to hospitals that must treat them, but the hospitals will not receive Medicaid reimbursement. Neither Medicaid nor DSH payments. For the hospitals and therefore for States that do not provide Medicaid Expansion, this is a train wreck waiting to happen. What’s the answer? States must provide for Medicaid Expansion so that hospitals can receive Medicaid reimbursements for care and services they provide to these 21.3 million people. Unfortunately, many States appear to be considering not voluntarily participating in Medicaid Expansion. We cannot believe that those States have factored in the DSH losses to their hospitals. From purely a financial viewpoint, States will significantly benefit if they expand Medicaid and ensure hospitals receive Medicaid reimbursement for the care and services they provide to the 21.3 million people. Disability and Elderly Advocates: 1. Get to your statewide Hospital Associations. They have paid lobbies that know how to work the political process. Join their efforts to convince your Governors and State legislators to enact Medicaid Expansion. Timing is critical since State budgets are being planned NOW for 2014. 2. Most newspapers, etc. do NOT understand how the ACA’s Medicaid Expansion fits together with the DSH payments. Explain it to them. Governors in the following States have threatened not to expand Medicaid in 2014. We are not sure how much is just huffing and puffing. Here are the approximate annual DSH Medicaid funds their States have received and potentially will lose, if Medicaid Expansion does NOT occur in these States. ANNUAL MEDICAID DSH PAYMENTS TO (SELECTED) STATES: Alabama $445,819,332 Arkansas $61,416,819 Connecticut $162,627,439 Florida $241,187,904 Indiana $121,122,632 Kansas $46,807,379 Kentucky $173,659,743 Louisiana $770,957,650 Michigan $338,776,418 Mississippi $204,084,644 Missouri $525,857,264 Nebraska $47,698,173 Nevada $95,232,395 New Jersey $975,416,270 New Mexico $28,851,260 Oklahoma $40,706,148 Ohio $566,951,426 Pennsylvania $534,244,593 Rhode Island $122,720,991 New Jersey $930,234,696 South Carolina $415,604,650 Tennessee $151,396,268 Texas $1,286,627,916 Utah $25,914,531 Virginia $192,435,368 West Virginia $55,087,700 Nationwide $15,019,365,273 Steve Gold, The Disability Odyssey continues Back issues of other Information Bulletins are available online at with a searchable Archive at this site divided into different subjects. Information Bulletins will also be posted on my blog located at To contact Steve Gold directly, write to or call 215-627-7100. Ext 227.