CHICAGO -- An association of safety-net hospitals is lobbying Congress to restore provider cuts built into the new federal health care law in light of the uncertainty over how many states will choose to opt out of the law’s Medicaid expansion provision.

Safety-net and public hospitals, many of which are owned by local governments, could be on the hook for $53.3 billion in uncompensated care costs through 2019 due to a higher number of uninsured patients than originally expected when the law was written, the National Association of Public Hospitals and Health Systems, which has 200 members, said in a report out Friday.
The Affordable Care Act relies on deep cuts in Medicaid disproportionate share hospital funding, which is federal payments to cover uninsured patients that mostly go to safety-net hospitals. Cuts in DSH payments start in 2014 and are scheduled to reach $14.1 billion, or nearly 50% of the program, by 2019.

When the law was being crafted, hospitals expected the DSH cuts would be offset by a big boost in the number of insured patients, either through private insurance or the Medicaid expansion provision.

But last June, the Supreme Court ruled that states can opt out of the Medicaid expansion program, and several have already indicated they will do so. The Congressional Budget Office in August estimated that the court’s decision could mean between six to 10 million more uninsured residents than originally expected, with a total of 29 million uninsured individuals by 2019, according to NAPH.

“When the law was written, there was a balance in the trade off as they were trying to figure out how to pay for the law,” said Beth Feldpush, NAPH’s vice president of public policy and advocacy. “Now, we may not get to the coverage levels we originally anticipated, yet those cuts are hardwired into the law, and we see an imbalance for our members.”

Like other public finance experts, NAPH notes that the cuts will also likely strain local and state budgets.

On the state level, safety-net providers are heavily lobbying state officials to participate in the Medicaid expansion program. On the federal level, NAPH is asking Congress to restore some of the disproportionate share cuts to protect safety-net hospitals.

“We’re talking to lawmakers and stakeholders around town,” Feldpush said. “We realize that Congress is going to be having a lot of difficult conversations in the coming months around our federal deficit, and that this is just one piece of the puzzle. But as Congress is on the cusp of having those conversations, it’s time to remind people that there’s an imbalance.”

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