• Talking Points
  • February 4, 2019

Delay the Medicaid DSH Cuts

  • Medicaid Disproportionate Share Hospital (DSH) payments are critical to children's hospitals and their ability to provide health care to all children. Congress created the Medicaid DSH program to provide financial help to hospitals that treat a large number of Medicaid and uninsured patients. The program has and will continue to play an important role for children's hospitals in addressing Medicaid underpayment.
  • Medicaid is the single largest health insurer for children in the United States. Half of the nation's children are provided coverage through Medicaid (37 million) and the Children's Health Insurance Program (CHIP) (9 million). Medicaid, along with CHIP, is the foundation of America's commitment to providing coverage and access to care for children.
  • Children's hospitals are major Medicaid providers. Although they account for less than 5 percent of hospitals, children's hospitals care for almost one half of children admitted to hospitals. The majority of patients in a children's hospital (59 percent of inpatient days on average) are covered by Medicaid.
  • Medicaid DSH payments are important for the viability of children's hospitals and their ability to care for all children. Medicaid DSH payments supplement inadequate Medicaid reimbursement to children's hospitals. Medicaid (including DSH payments) reimburses children's hospitals an average of only 80 percent of the costs of providing care. But Medicaid reimbursement to children's hospitals would fall even lower without needed DSH payments. DSH payments help children's hospitals sustain specialized pediatric care services and pediatric training programs that benefit all patients.
  • Children's hospitals need for Medicaid DSH payments persists. The cuts to the Medicaid DSH program were enacted based on the assumption that the need for DSH payments would decline because fewer adults would be uninsured after full implementation of the Affordable Care Act. The Medicaid DSH cuts do not take into account the fact that Medicaid reimbursement to children's hospitals has and will continue to be inadequate. Medicaid DSH payments to children's hospitals are needed until each state's Medicaid program payments cover the cost of care.

Children's hospitals ask Congress to delay the Medicaid DSH cuts that are scheduled to begin on October 1, 2019.