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Hospital Leaders Call on Congress to Halt Cuts to Safety Net

FOR IMMEDIATE RELEASE

WASHINGTON — The chief executives of 18 of the nation’s largest hospital systems that care for low-income patients urged congressional leaders today to halt damaging cuts to Medicaid funding that supports their safety net mission.

The hospital leaders, all members of the America’s Essential Hospitals board of directors, asked for a two-year delay of Medicaid disproportionate share hospital (DSH) payment cuts in a letter to Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Charles Schumer (D-NY); and Reps. Paul Ryan (R-WI) and Nancy Pelosi (D-CA), House speaker and minority leader, respectively.

“Without a further delay of the Medicaid DSH payment reductions, hospitals face a financial shortfall of $2 billion in [fiscal year] 2018,” the hospital executives wrote. “These cuts grow annually to $8 billion by FY 2024. Our nation’s hospitals cannot sustain losses of this magnitude.”

America’s Essential Hospitals represents 325 hospitals and health systems nationally that fill safety-net, teaching, and public safety roles in their communities. Recent data show the 18 systems represented by the letter signers together see nearly 650,000 annual admissions—including more than 205,000 Medicaid discharges—employ more than 108,000 people, and sustain more than $1.41 billion in uncompensated care costs.

The association’s members overall provided about 17 percent of all uncompensated care nationally in 2015. The average essential hospital has about $61 million a year in uncompensated care costs, about eight times that of other hospitals, and an operating margin of 3.2 percent, less than half that of other hospitals.

“In treating those who have nowhere else to turn, our hospitals incur substantial uncompensated costs,” the board members said in their letter. “Medicaid DSH payments allow our hospitals to continue serving patients in our communities while operating on very narrow, or even negative, margins.”

The Medicaid DSH program helps hospitals partially offset their costs of uncompensated care. The Affordable Care Act (ACA) dramatically cut Medicaid DSH payments, based on the expectation that coverage gains would lessen the need for such funding. But marketplace coverage shortfalls and the 2012 U.S. Supreme Court decision making Medicaid expansion optional have left millions more uninsured than expected when Congress passed the ACA in 2010. Yet, the DSH cuts remain, with no mechanism to respond to fluctuations in coverage levels.

Recognizing this imbalance, Congress, in three strongly bipartisan votes, delayed the DSH cuts through the September 30 end of the 2017 federal fiscal year. The House of Representatives last fall passed a two-year delay of the cuts as part of its Children’s Health Insurance Plan funding bill. But Congress ended the year with only a temporary funding measure that did not include the DSH cut delay. That temporary funding expires January 19, and America’s Essential Hospitals is seeking a DSH delay as part of the next funding bill.

“We ask that you work swiftly to delay these cuts for at least two fiscal years, through 2020, or until a more sustainable, permanent solution is reached,” the board members wrote. “A delay ensures our hospitals can continue to care for the most vulnerable among us.”

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About America’s Essential Hospitals
America’s Essential Hospitals is the leading association and champion for hospitals and health systems dedicated to high-quality care for all, including the most vulnerable. Since 1981, America’s Essential Hospitals has initiated, advanced, and preserved programs and policies that help these hospitals ensure access to care. We support members with advocacy, policy development, research, and education.

Our 325 members are vital to their communities, providing primary care through trauma care, disaster response, health professional training, research, public health programs, and other services. They innovate and adapt to lead the broader health care community toward more effective and efficient care.

Contact:
Carl Graziano
cgraziano@essentialhospitals.org
202.585.0102

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