What the DC Budget Deal Means for Hospitals

The Bipartisan Budget Act of 2018, approved on February 9, 2018, offers a two-year budget deal, and most importantly, added an additional four years, for a total of 10 years, of funding to the Children’s Health Insurance Program (CHIP), delayed the Medicaid Disproportionate Share (DSH) cuts to hospitals for two years, and continued funding for the nation’s community health centers.  The budget legislation also directs a reinstatement and five-year extension of both the Medicare Dependent Hospital (MDH) program and Medicare Low-Volume (MLV) payment adjustment.  It did not, however, address Cost Sharing Reduction (CSR) payments or a re-insurance program that would help cover the cost of people with complex and expensive healthcare needs.  There will be more about these efforts in the next Dahill Dose post.

Nonetheless, the healthcare and hospital industry achieved progress, but funding threats still linger.  We are thankful to members of New York’s delegation who represent constituents in the nine suburban counties east and north of New York City for supporting the health priorities contained in the Bipartisan Budget Act of 2018.  The members who committed to support patients and communities served by Suburban Hospital Alliance hospitals include Senators Charles Schumer and Kirsten Gillibrand and Representatives Peter King, Kathleen Rice, and John Faso.  A special shout out to Senator Charles Schumer for his efforts in negotiating this budget deal.

The delay of the DSH cuts is not all good news for hospitals, because adding more years to these scheduled cuts means deeper cuts for hospitals on the back end.  DSH cuts are supplementary payments to hospitals that care for high numbers of uninsured and indigent patients.  The DSH cuts were agreed upon by the hospital industry back in 2010 as one way to help fund provisions of the Affordable Care Act, specifically insurance expansion.  The cuts are based on the belief that as insurance coverage expands, the ranks of the uninsured contract.  However, with the continual threat of the ACA’s demise and instability of the insurance exchanges, insurance expansion remains at risk and unpredictable.

The Trump administration canceled CSR payments to insurers in October 2017.  This one move has shaken the viability of the exchanges.  These payments help low income Americans afford their co-payments and deductibles. For New York, loss of the CSR payments means a loss of about $900 million in funding for the state’s Essential Health Plan.  This is a plan available to low-income New Yorkers who earn too much to qualify for Medicaid, but not enough to afford commercial insurance sold on the exchange.

The elimination of the individual insurance mandate, which was part of the tax reform legislation passed earlier this year, may also increase the number of uninsured.  The Congressional Budget Office (CB) estimates that this provision will swell the ranks of the uninsured by 13 million by 2027.

But back to the Bipartisan Budget Act of 2018.  A total of 99,119 children located in the nine counties throughout the Suburban Hospital Alliance regions no longer have to worry that their insurance coverage would stop.  The CHIP program has been a popular bi-partisan program in place for 20 plus years, guaranteeing children from low and moderate-income families’ access to affordable health insurance.  The Medicare Dependent Hospital payment adjustment assists small hospitals for which Medicare patients comprise a significant percentage of patients, and therefore, the hospital’s revenue.  Medicare Low Volume hospitals are essential to their rural communities, have a modest volume of patients, and are located at least 15 miles from the next nearest hospitals.  Both these Medicare payment programs help such vital hospitals remain solvent and available to their communities.

The next step in the federal budget process is for legislators to write appropriations bills to spend the money allocated by the budget bill.  Appropriations bills are due March 23, 2018. Check the Dahill Dose then for the outcome of this legislative process.



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