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MACPAC Issues Recommendations for Medicaid DSH, Supplemental Payments

In its March report to Congress, the Medicaid and Children’s Health Insurance Program Payment and Access Commission (MACPAC) made recommendations on several issues of importance to essential hospitals, including Medicaid disproportionate share hospital (DSH) and upper payment limit (UPL) payments to hospitals.

Medicaid DSH

MACPAC makes three recommendations for Congress to mitigate upcoming Medicaid DSH allotment reductions, effective Oct. 1.

To mitigate the negative effect of these steep cuts on hospitals, the commission recommends that  Congress act to:

  • phase in Medicaid DSH reductions more gradually over a longer period of time;
  • apply the reductions to unspent Medicaid DSH allotments first; and
  • distribute the reductions in a way that gradually improves the relationship between Medicaid DSH allotments and the number of non-elderly, low-income individuals in a state.

MACPAC also provides its statutorily required annual analysis of Medicaid DSH. Notably, the commission’s analysis of trends in Medicaid DSH payments found a rise in Medicaid shortfall for hospitals, even as charity care and bad debt declined following Affordable Care Act implementation.

In a statement, America’s Essential Hospitals said that while it appreciates MACPAC’s work and recognizes the need for a sustainable way to support essential hospitals, Congress first must stop the $4 billion cut to Medicaid DSH funding scheduled for Oct. 1.

UPL Payments

The report also examines UPL payments, a significant supplemental payment for hospitals. The commission raises several concerns about the accuracy and completeness of available UPL data and recommends that the Department of Health and Human Services (HHS):

  • establish process controls to ensure that UPL demonstration data are accurate and complete and use these controls to review claimed expenditures; and
  • make UPL data available to the public in a standard format that permits analysis.

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

Rachel Schwartz is a policy associate at America's Essential Hospitals.