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Senate-Passed COVID-19 Relief Package Includes DSH Fix

The $1.9 trillion COVID-19 relief package the Senate passed March 6 contains a top priority for essential hospitals: a temporary increase in Medicaid disproportionate share hospital (DSH) allotments to coincide with the increased federal medical assistance percentage (FMAP) that unintentionally put hospital DSH payments at risk in some states.

The provision would ensure essential hospitals receive the same level of Medicaid DSH payments as they would have expected absent the pandemic. It would provide a technical fix for the unintended reduction in DSH allotments that resulted from the FMAP increase in the Families First Coronavirus Response Act.

The Senate passed the bill, the American Rescue Plan Act, with a 50–49 vote after a 25-hour marathon of amendment votes and debate, including the longest roll call vote in Senate history. Congressional Democrats used budget reconciliation to pass the bill with a simple majority vote rather than the 60 votes typically needed to avoid a filibuster. It was the sixth in a series of COVID-19 relief bills and the first not developed and passed on a bipartisan basis.

The bill also includes $8.5 billion in funding for certain rural providers that serve Medicare and Medicaid beneficiaries, including hospitals in an urban area that have redesignated as rural for Medicare payment purposes. The bill would not add money to the Provider Relief Fund (PRF), an appropriation precluded by budget reconciliation rules. The rural provider funding will be available through a new, similar pathway. The $8.5 billion in funding is a narrow version of Sen. Joe Manchin’s (D-WV) request for $35 billion in additional funding for the PRF for all providers, with 20 percent targeted toward rural providers.

The American Rescue Plan Act also includes:

  • $160 billion for COVID-19 vaccine and testing programs;
  • $360 billion for state, local, and territorial governments;
  • $7.66 billion for public health departments for workforce development;
  • several Medicaid provisions to provide incentives for Medicaid expansion, including a state option to provide Medicaid coverage 12 months postpartum for five years and coverage for COVID-19 vaccine, testing, and treatment;
  • restoration of the area wage index floor for hospitals in all-urban states;
  • an increase in health care subsidies and tax credits for workers, including 100 percent coverage of health insurance premiums under COBRA for laid-off workers; and
  • economic assistance for individuals and businesses impacted by the COVID-19 pandemic, including an extension of the $300-per-week federal supplemental unemployment insurance and a third round of stimulus payments, at up to $1,400 per eligible individual.

The package now returns to the House for a final vote that is expected as early as Tuesday. Some progressive House Democrats have raised concerns that the Senate-passed legislation does not provide enough support for struggling Americans, lamenting the removal of the $15 federal minimum wage provision due to the strict reconciliation rules. Despite this, the bill is expected to pass the House and then head to President Joe Biden for his signature.

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About the Author

Margaret Peterson is the manager of legislative affairs at America's Essential Hospitals.

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