The House-passed Build Back Better Act includes a provision that would cut Medicaid disproportionate share hospital (DSH) and uncompensated care pool payments to states that did not expand Medicaid as envisioned by the Affordable Care Act (ACA).
The bill would cut DSH payments to these states by 12.5 percent beginning in fiscal year (FY) 2023. If a state expands Medicaid after FY 2023, its full DSH allotment would be restored for the year it expands. Conversely, if an expansion state rolls back its expansion, it would receive a 12.5 percent cut for that fiscal year, prorated by the days for which expanded coverage is available. These states’ share of ACA DSH cuts scheduled to start in FY 2024 would come on top of the 12.5 percent cut.
Cutting the DSH program — especially with hospitals still on the front lines of COVID-19 — is misguided. We urge Congress to remove the cuts to Medicaid DSH payments proposed in the Build Back Better Act. This Our View dispels common misconceptions about these proposed DSH cuts.