Feds Offer Rule on Hospital Medicaid Payments that Helps States Not Expanding Medicaid

“That sigh of relief you heard Monday was from hospital administrators in nearly two dozen states, including Florida and Texas.”

This is how the Kaiser Health News described the reaction to the Obama administration announcement that the anticipated reduction in special Medicaid payments to hospitals for care of the uninsured will not penalize states that have not expanded their Medicaid eligibility guidelines.

New proposed rules were released Monday, May 13.

Hospitals have been a major advocacy force is state battles over Medicaid expansion. The Affordable Care Act funding is in part dependent upon the reduction of extra Medicaid hospital payments  – called disproportionate share hospital, or DSH. The current DSH payments total $11 billion and while next year’s reduction is just $500 million, by 2018 $5 billion must be cut.

The hospitals had agreed to the reductions during the negotiations around the ACA under the assumption that Medicaid expansion would be mandatory for all states and hospitals would care for far fewer uninsured persons. The Supreme Court passed the expansion decision to states.

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