In more than 50 meetings with congressional representatives Dec. 9, during the America’s Essential Hospitals fall Policy Assembly, member leaders laid a foundation for the association’s 2015 advocacy agenda. Key federal policy issues for essential hospitals include these:

Protecting Medicaid

Protecting Medicaid is the association’s top priority. Congressional leaders have signaled their interest in reforming Medicaid in ways that could lead to damaging cuts and reduced access to care. High on the list of possible changes would be use of a per capita cap system, which would set an upper limit on what the federal government pays per Medicaid recipient. This arbitrary cap likely would force states to cut services or provider payment rates to moderate their growing share of Medicaid costs.

Other Medicaid proposals under consideration could include cuts to Medicaid disproportionate share hospital (DSH) payments, provider assessments, and the federal Medicaid match.

Preserving 340B Drug Pricing

Threats to scale back the scope of 340B drug discounts are not new, but changing the program now could dramatically impact essential hospitals. Providers use savings on drugs purchased through the program to increase access to medications and other vital services for low-income patients. A weakened 340B program could mean higher costs for care of uninsured and underinsured patients and reduced resources for communitywide essential services, such as trauma care and disaster response.

Supporting risk adjustment for sociodemographic factors in quality incentive programs

A growing body of evidence demonstrates that the vulnerable populations essential hospitals serve experience hardships that lead to poor health. These hardships are related to patients’ sociodemographic status, including poverty, homelessness, and a lack of family support.

Pay-for-performance programs, such as the Medicare Hospital Readmissions Reduction Program (HRRP), should account for these sociodemographic factors. Currently, the HRRP uses readmissions, regardless of patients’ sociodemographic status, as a proxy for demonstrating quality of care. This may increase penalties for essential hospitals under the HRRP and, in turn, reduce resources essential hospitals need to provide access to care for vulnerable patients.

Ensuring that Medicare continues to support GME, Medicare DSH, and outpatient E&M payments

Protecting Medicare has long been a priority of essential hospitals, and it is as important as ever in a Congress likely to consider cuts to the program. In particular, cuts to Medicare graduate medical education (GME), Medicare DSH, and outpatient evaluation and management (E&M) payments could have damaging effects on essential hospitals.

Medicare GME payments help hospitals cover the costs of training future physicians. As essential hospitals train four time the number of physicians as other acute care hospitals, this funding is critical. Medicare DSH provides resources to hospitals that serve high volumes of uninsured patients. Cuts to Medicare DSH threaten some hospital’s ability to do this – particularly those with a high proportion of patients dually eligible for Medicare and Medicaid. And cuts to outpatient E&M payments could weaken the ability of essential hospitals to provide outpatient care. Members of America’s Essential Hospitals would face an average E&M cut 4.5 times high than other hospitals across the country.

Next Steps

Now is the time to start important conversations about these issues. The 114th Congress will start in just a few weeks and new leadership, particularly in the Senate, is ready to work with essential hospitals on many of these issues, especially risk-adjustment for sociodemographic status. But Republican leaders also are likely to introduce measures that could cut many critical programs, including Medicaid, Medicare, and 340B.

We look forward to continuing these conversations this spring, particularly during the next Policy Assembly, March 17 and 18, in Washington DC.