Hospitals appreciate DSH efforts
The final days of March brought great news for Tennessee’s hospitals from Washington.
Just before adjourning for its Easter recess, the U.S. House of Representatives passed a long-awaited solution to the Medicare sustainable growth rate, known as the “SGR (Medicare Sustainable Growth Rate) fix.” Included in this legislative package was language that will restore dollars to Tennessee’s hospitals in the form of disproportionate share hospital (DSH) payments.
Through Medicaid DSH programs, hospitals receive supplemental payments based on the volume of care provided to Medicaid and indigent patients. These payments are intended to help hospitals cover some of the costs of providing care to uninsured and underinsured patients. While commonplace in the other 49 states and the District of Columbia, Tennessee currently does not receive DSH funding.
Regular DSH payments have been absent in Tennessee for more than 20 years, due to an agreement made in 1994 when our state moved from a traditional Medicaid program to what we know as TennCare. The initial structure of TennCare extended coverage to uninsured and uninsurable Tennesseans, which helped reduce the cost of uncompensated care for uninsured patients on hospitals, and Tennessee agreed to forgo future DSH payments.
However, in 2006, when the state disenrolled the adult uninsured and uninsurable Tennesseans from the TennCare program, the need for DSH returned without having the payments fully reinstated. Since then, hospitals in our state have been lobbying Tennessee’s congressional delegation to find a way to restore Tennessee’s DSH payment, or at least a partial payment.
The DSH payments are even more important in today’s health care climate. Hospitals face declining revenue due to significant cuts in reimbursement from Medicare resulting from the Affordable Care Act (ACA) and other federal legislation, coupled with a steady rate of indigent patients and initiatives to reduce Medicaid payments, which already only cover about 70 percent of the cost of hospital care.
Medicaid DSH payments help alleviate some of the financial challenges faced by hospitals and enable facilities to continue to provide care to those who lack coverage or the means to pay.
On March 26, Tennessee’s hospitals moved a major step closer to restoring a portion of our DSH payment with the House’s passage of the SGR fix. The approved deal will result in a total of $80 million per year in DSH payments for hospitals across the state. Not only did this victory mark the culmination of nearly a decade’s worth of advocacy by hospitals and the Tennessee Hospital Association, but it highlighted the hard work of members of Tennessee’s congressional delegation.
Among those members is U.S. Rep. Steve Cohen of Memphis, who along with other delegation members worked to construct a plan and language that ultimately was endorsed by both the Republican and Democratic leaders in the House to extend the partial DSH payment for 10 years, with an opportunity for future renewal.
This 10-year approach made the deal more palatable to lawmakers and helped ensure approval of the measure. Hospitals are grateful to Cohen, along with Reps. Diane Black and Marsha Blackburn, for taking the lead on this issue and seeing it through to passage.
The next step is a vote on the SGR fix by the U.S. Senate, where the same DSH language will be included. Sens. Lamar Alexander and Bob Corker, who have been champions for Tennessee hospitals’ gaining short-term partial DSH payments since 2009, have expressed support for the language and have committed to back the legislation when the Senate reconvenes later this month.
Without the support of our senators and representatives, this milestone for our state’s hospitals would not be possible, and I speak for all hospitals when I express my sincere thanks for their hard work.