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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

AAMC Comments on a CMS Medicaid DSH Proposed Rule

July 19, 2013—The AAMC submitted a July 12 comment letter  on a Centers for Medicare and Medicaid Services (CMS) proposed rule titled “Medicaid Program: State Disproportionate Share Hospital Allotment Reductions.”  The proposed rule, published May 15 in the Federal Register [see Washington Highlights, May 17], would  implement provisions of the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) that reduce state Medicaid Disproportionate Share Hospital (DSH) allotments annually from FY 2014 through FY 2020 (annual reductions were extended through 2022 by subsequent legislation).

AAMC commented on CMS’s proposed methodology called “the DSH Health Reform Methodology” (DHRM), which would reduce FY 2014 and FY 2015 allotments ($500 million and $600 million in aggregate cuts, respectively).  CMS explained in the proposed rule that 2016 and beyond will be addressed in future rulemaking.

The AAMC commended CMS for limiting the proposed rule methodology to FYs 2014 and 2015 because it would allow time to assess the impact of the DHRM.  The letter notes this is “particularly important” because it is difficult to evaluate its effect on the institution level at this point.  Also, as CMS pointed out, there are not enough data to understand the impact of state decisions regarding Medicaid expansion, so the proposed temporary methodology would not take state Medicaid expansions into account.

The AAMC also supported CMS’s proposal to assign equal relative weights of one-third to all three DHRM weighting factors: 

  • State’s level of uninsured individuals (the uninsured percentage factor [UPF]);
  • Whether the state directs DSH payments to hospitals with high Medicaid inpatient volumes (high volume of Medicaid inpatients factor [HMF]); and
  • Hospitals with high levels of uncompensated care (high level of uncompensated care factor [HUF]).

These factors are intended to reduce DSH payment reductions for states with high levels of uninsured individuals and states that target their DSH payments to hospitals with high Medicaid volume or high levels of uncompensated care.

The AAMC urged CMS to revise the definition of “uninsured” at the service level to include patients who lack insurance for the specific services provided, rather than only individuals who have no insurance.  The definition also should include patients who have exhausted their coverage during a lengthy hospital stay and uncompensated care costs associated with unpaid coinsurance and deductibles. 

Additionally, the AAMC recommended that the data be adjusted to count accurately undocumented individuals who are uninsured.

Contact:

Allison M. Cohen, J.D., LL.M.
Senior Policy and Regulatory Specialist
Telephone: 202-862-6085
Email: acohen@aamc.org

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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org