Katherine Neuhausen et al.: Safety-net hospitals at risk:
Medicaid DSH [Disproportionate Share Hospital program] disburses $11.5 billion annually to the states, which have considerable latitude in allocating these funds…. The [ACA's DSH] cuts are back-loaded — starting at $500 million (4% of current national DSH spending) in 2014 but reaching $5.6 billion (49% of current spending) in 2019…. The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule allocating reductions in DSH payments across states for the first 2 years… the biggest reductions will hit states that don’t target DSH payments to hospitals providing large amounts of Medicaid and uncompensated care…. Texas faces one of the biggest proposed reductions in its baseline DSH allocation (–5.5%, a cut of $56.1 million) because it broadly allocates DSH funds to hospitals that provide little uncompensated care. In contrast, California targets its DSH money to only 4% of its hospitals and will therefore receive a much smaller proportionate reduction of 2.8% (a cut of $32.6 million)…. If properly enforced, the proposed rule will help sustain the safety net. But if the state governments that refused to expand Medicaid also refuse to rethink their approach to allocating DSH funds, there will be little money left to sustain their safety-net hospitals when the cuts deepen in 2017.