On Sept. 27, Reps. John Katko (R-N.Y.) and Larry Bucshon, MD, (R-Ind.) sent a letter to congressional leadership outlining the unintended consequences of Section 203 of the Consolidated Appropriations Act, 2021 (P.L. 116-260) on some safety-net hospitals’ Medicaid Disproportionate Share Hospital (DSH) payments. The letter specifically highlighted the potential consequences for the patients and communities served by these hospitals and urged congressional action to avoid these cuts before the end of the year. The letter garnered signatures from a geographically diverse group of 13 Republican members of the U.S. House of Representatives.
The letter detailed how Section 203, which first took effect on Oct. 1, 2021, changed how hospitals calculate their Medicaid DSH cap (the maximum amount of Medicaid DSH funding that a hospital is eligible to receive). The authors explained that, under Section 203, hospitals are prohibited from accounting for losses associated with patients eligible for both Medicaid and a third-party source of coverage when calculating their DSH cap. They go on to write that the hospitals negatively impacted by this policy are those that care for a high volume of Medicare and Medicaid dual-eligibles who are “among the sickest and most complicated patients” and that these institutions are “paid substantially below cost” for this care.
The letter concluded by encouraging leadership to prevent the adverse financial consequences of Section 203 on these institutions by including a legislative solution in an end-of-year fiscal package.