As Medicaid cuts draw closer, hospitals look to Congress for help

With billions of dollars in Medicaid assistance to hospitals at stake, hospitals that care for patients with low incomes are urging congressional leaders to prevent looming cuts.

More than 250 hospitals and healthcare leaders signed off on a letter to House and Senate leadership looking to prevent cuts to the Medicaid Disproportionate Share Hospital (DSH) program. The program offers critical aid to safety-net hospitals that serve a high percentage of patients using Medicaid.

On Oct. 1, the DSH program is slated to be cut by $8 billion. That accounts for more than two-thirds of the program’s aid in the 2024 fiscal year, according to America’s Essential Hospitals, a group representing safety-net hospitals.

The group, which organized the letter to congressional leaders, says the reductions would be devastating to hospitals that treat a high percentage of patients with lower incomes.

Over the next four years, the DSH program is slated to be cut by a total of $32 billion, or $8 billion annually.

“These cuts would undermine America’s health care safety net and significantly reduce our hospitals’ ability to provide lifesaving services to the communities you represent,” the letter states. “The far-reaching effects would limit your constituents’ access to care and hurt our local economies, including through job losses.”

The DSH program is designed to help hospitals that provide substantial amounts of uncompensated care to disadvantaged neighborhoods, helping to offset some of those expenditures.

The reductions are tied to the Affordable Care Act. Policymakers assumed there would be less need for funding in the DSH program because there would be a sufficient reduction in patients without coverage.

Hospitals signing the letter range from Alameda Health System to Zuckerberg San Francisco General Hospital. Those signing the letter include hospitals from University of California Health, Henry Ford Health, NYC Health + Hospitals, Jefferson Health, Orlando Health and more.

Hospitals say the cuts come at a difficult time, as hospitals continue to face economic difficulties, including higher labor and supply costs.

Health systems are facing another challenge related to Medicaid, as more people are losing coverage. Hospitals are seeing the prospect of providing more charity care as states are tightening their Medicaid eligibility. About 5 million Americans have lost coverage as states review who should be getting Medicaid, according to an analysis by the Associated Press.

Some Republican and Democratic lawmakers are working to prevent the scheduled Medicaid cuts.

A bipartisan group of 51 senators, led by U.S. Sens. Bob Casey, D-Pa., and U.S. Sen. James Lankford, R-Okla., sent a joint letter last month to Senate leaders seeking to block the reduction in Medicaid DSH funds. A bipartisan group of House members also introduced legislation in April to restore the money.

The hospitals are clinging to the hope that Congress has blocked scheduled reductions in DSH funding previously. They are urging lawmakers to do it again.

“Given the ongoing high levels of uncompensated care across the country, Medicaid DSH cuts simply cannot be justified,” the hospitals state in the letter. “At a time of substantial instability within the healthcare system, it is imperative Congress continue to delay and eliminate Medicaid DSH cuts.”