1. Disproportionate-share hospital payment reductions may threaten the financial stability of safety-net hospitals.
- Author
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Neuhausen K, Davis AC, Needleman J, Brook RH, Zingmond D, and Roby DH
- Subjects
- California, Hospitals, County economics, Hospitals, Public economics, Humans, Managed Care Programs economics, Medically Uninsured statistics & numerical data, Uncompensated Care economics, United States, Financial Management, Hospital economics, Hospital Costs statistics & numerical data, Medicaid economics, Patient Protection and Affordable Care Act economics, Reimbursement Mechanisms economics, Reimbursement, Disproportionate Share economics, Safety-net Providers economics
- Abstract
Safety-net hospitals rely on disproportionate-share hospital (DSH) payments to help cover uncompensated care costs and underpayments by Medicaid (known as Medicaid shortfalls). The Affordable Care Act (ACA) anticipates that insurance expansion will increase safety-net hospitals' revenues and will reduce DSH payments accordingly. We examined the impact of the ACA's Medicaid DSH reductions on California public hospitals' financial stability by estimating how total DSH costs (uncompensated care costs and Medicaid shortfalls) will change as a result of insurance expansion and the offsetting DSH reductions. Decreases in uncompensated care costs resulting from the ACA insurance expansion may not match the act's DSH reductions because of the high number of people who will remain uninsured, low Medicaid reimbursement rates, and medical cost inflation. Taking these three factors into account, we estimate that California public hospitals' total DSH costs will increase from $2.044 billion in 2010 to $2.363-$2.503 billion in 2019, with unmet DSH costs of $1.381-$1.537 billion., (Project HOPE—The People-to-People Health Foundation, Inc.)
- Published
- 2014
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