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  • Washington Highlights

    MACPAC Meets to Discuss DSH Study, Safety Net ACOs, Medicaid Spending

    Jason Kleinman, Senior Legislative Analyst, Govt. Relations

    The Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC) May 14-15 met to discuss a mandated study on Disproportionate Share Hospital (DSH) payments, safety-net Accountable Care Organizations (ACOs), and trends in Medicaid spending and state budgets.

    MACPAC staff began the meeting with a discussion about a mandated study of Medicaid DSH payments the commission must submit to Congress on an annual basis, beginning February 2016. The report will include data and state-specific analyses of the relationship of DSH allotment to changes in the number of uninsured, the amount and sources of hospitals’ uncompensated care costs, and hospitals with high levels of uncompensated care that also provide essential community services. Commission staff have already completed an estimate of unreduced DSH allotments for fiscal years (FYs) 2016 and 2017 and developed a preliminary DSH allocation reduction simulation model for FY 2018.

    The meeting continued with an overview from Beth Waldman, J.D., senior consultant, Bailit Health, on common themes that emerged from a study on Medicaid safety-net ACOs based on site visits to seven ACOs in five states. Some of the common themes Waldman found include: reasons for ACO formation included financial constraints and a belief that adopting new payment models was necessary for long-term sustainability; the role of the state varied from none to full program design and operation; and safety-net ACOs face significant challenges, including lack of capital, access to management information, and serving the Medicaid population.

    MACPAC staff also discussed Medicaid spending and its effect on state budgets. Medicaid’s growth has mirrored overall health care spending in the country. Between 1970 and 2013, health care spending increased from 7.0 percent to 17.4 percent of GDP. Over the same period, Medicaid spending increased from 0.5 percent to 2.7 percent of GDP.

    Medicaid spending is expected to reach 18 percent of total health care spending in 2017 and remain at that level through 2023. MACPAC staff also noted there was substantial variation in state spending between those states that expanded their Medicaid program and those that did not. The median growth rate for states that expanded Medicaid was 1.4 percent, compared to a median growth rate of 4.2% for states that did not expand Medicaid.