Disproportionate Share Hospital Adjustment Payments ( or DSH, pronounced "DISH") are in for a serious adjustment as part of the Affordable Care Act. I think of us as on the brink of the re-invention of DSH.
The ACA's plan was to reduce DSH funds, under both Medicare DSH and Medicaid DSH, as the number of uninsured fell. This plan, to reduce DSH payments to the states ($11.3B total in 2011 to be cut in half by 2019), was part of the general plan to lower the number of uninsured by expanding Medicaid and the creation of the Exchanges. Medicaid DSH is over two times larger than Medicare DSH and distibuted by a different regulatory formula, but both are facing radical re-invention.
Even before the ACA's trip to the Supreme Court, however, this was sobering. DSH, after all, is the only Medicaid funding stream through which states are explicitly allowed to reimburse providers for care of the uninsured. And those uninsured include the undocumented, the outsiders to the Affordable Care Act.
Recognizing that DSH allotment reductions would not be felt evenly throughout the United States, the conventional thinking was that health care reform — whatever freight of realistic and unrealistic expectations we might collectively attach to it — was not going to solve our nation's immigration problems. Privately, safety net hospitals and health care facilities were concerned, particularly in states with high numbers of undocumented residents. That concern was amplified by the Supreme Court's determination that Medicaid expansion would be optional for the states, followed by the Secretary of HHS's insistance that this did not alter the plan to cut DSH drastically.
The line between Medicaid expansion and non-Medicaid expansion states is a work in progress, one made even blurrier by the apparent terms of Arkansas's negotiations with the federal government over Medicaid expansion this past week. What does seem likely, is that there will be some states that do not expand in the near future.
The question of how DSH's re-invention ought to treat states that choose not to expand Medicaid haunts us, just as our own ambivalence over our immigration policy haunts us. CMS's regulatory guidance on ACA implementation (FAQs of 12/10/12) made it clear that the Secretary was not yet ready to indicate whether HHS is planning any modification to the manner in which it will reduce DSH allotments as it relates to states that do not expand Medicaid. But people were asking. A response was promised in the spring.
Does the HHS Secretary have the discretion to alter the distribution of DSH cuts between and among the states? Ought she? If states that decline to expand Medicaid simultaneously shelter themselves from some of the implications of that choice by gaining disproportionate immunization from DSH cuts, what message does that send?
I have written before about Suzanne Melter's book, The Submerged State: How Invisible Government Policies Undermine American Democracy. I wonder if the public repudiation of federal Medicaid dollars by some states that would simultaneously welcome a disproportionate share of DSH federal dollars from a finite pool is the kind of unrecognized government benefit that needs to be brought to consciousness for how it shapes our political and fiscal lives.