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MACPAC Issues Medicaid DSH Recommendations

In a January public meeting, Medicaid and CHIP Payment and Access Commission (MACPAC) members voted nearly unanimously to issue recommendations to mitigate the impending Affordable Care Act–mandated Medicaid disproportionate share hospital (DSH) allotment reductions.

Barring congressional action, the allotment cuts will begin on Oct. 1 with:

  • $4 billion in fiscal year (FY) 2020; and
  • $8 billion annually in FYs 2021–2025.

MACPAC’s Recommendations

MACPAC’s first recommendation urges Congress, if it chooses to proceed with the reductions, to take advantage of the full budget window by gradually phasing in the cuts under a revised schedule:

  • $2 billion in FY 2020;
  • $4 billion in FY 2021;
  • $6 billion in FY 2022;
  • $8 billion annually in FYs 2023–2029.

The commission’s second recommendation instructs Congress to require that the Department of Health and Human Services (HHS) apply reductions first to states with projected unspent DSH allotments, before applying reductions to other states.

MACPAC’s third recommendation instructs HHS to develop a methodology to distribute reductions in a way that gradually improves the relationship between DSH allotments and the number of non-elderly, low-income individuals in a state, after adjusting for differences in hospital costs in different geographic areas. This recommendation would rebase DSH payments to increase payments for states with historically low allotments.

Congress would have to revise Medicaid statute to implement these recommendations. The recommendations will be included in the commission’s March report to Congress.

America’s Essential Hospitals provided public comment at the January meeting, calling on the commission to clearly communicate the devastating impact that the DSH allotment reductions will have on essential hospitals. The association also urged the commission to keep sight of the importance of targeted DSH payments within a state in its future work on DSH policy.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Gontscharow is a senior policy analyst for America's Essential Hospitals.