Hospitals treating Medicaid patients face additional cuts under Affordable Care Act

Hospitals that provide uncompensated care in states that do not offer expanded Medicaid access may face an additional burden in 2014 as a result of cuts to Medicaid under the Affordable Care Act, according to a study published in the New England Journal of Medicine.

U.S. hospitals that are paid funds from the Medicare and Medicaid disproportionate share (DSH) will receive a 75% across the board cut to the DSH under the Affordable Care Act. However, if their state does not expand Medicaid access, who becomes covered in each state will vary widely, stated John A. Graves, PhD, in a news release.

“Expanded insurance through the exchanges alone will trigger lower DSH payments to hospitals,” Graves stated. “The problem comes in states where much of the uncompensated care provided will remain the same if Medicaid is not expanded, yet DSH cuts will still occur. Hospitals will need to recoup these DSH losses either by providing less uncompensated care, or by shifting the costs onto everyone else.”

States that expand Medicaid could cover up to 60% of uninsured patients in their state, Graves said, noting that states that do not expand Medicaid could place an additional burden on hospitals that care for insured patients.

Of the top five states most affected by the unintended reductions, Louisiana, Texas and Florida have announced they will not expand Medicaid coverage, Graves said.

Reference:

Graves JA. New Engl J Med. 2012;doi:10.1056/NEJMp1209450.

Disclosure: Graves is a consultant for Institute for Health Policy Solutions and Department of Health and Human Services. His institution received a grant from Robert Wood Johnson State Health Access and Reform Evaluation for his work on this study.