Understand how we got here — and how to move forward.


September 26, 2017

Hospitals face $43B in DSH payment cuts if Congress doesn't act by Sept. 30

Daily Briefing

Hospitals, health systems, and provider groups on Wednesday warned that federal funding for certain health care training programs could expire on Sept. 30 if lawmakers do not pass legislation to reauthorize the funds.

According to MedPage Today, the training programs at risk of losing federal funding Sept. 30 are:

  • The National Health Service Corps, which provides loan forgiveness and scholarships to primary care dental, medical, and mental health professionals in underserved areas;
  • Primary Care Training and Enhancement grants, which provide enhanced training to primary care providers, researchers, and teachers; and
  • The Teaching Health Center Graduate Medical Education program, which trains primary care residents in outpatient care at rural, tribal, and federally qualified health centers.

Stakeholders say funding is needed

Jack Ende, president of the American College of Physicians, during a National Coalition on Health Care (NCHC) event Wednesday said, "We have to shine a light on this because it will be a major step backwards if these programs go unfunded."

For instance, John Sealey, director of medical education at the Detroit Wayne County Health Authority, said, "Residents (now in training under the programs) would totally be without any source of revenue (and would) have to reapply to other programs" if federal funding for the initiatives expires.

Clif Knight, SVP for education at the American Academy of Family Physicians, said lawmakers should fund the programs for multiple years to ensure their stability. "We're trying to recruit students to programs and we don't know if they're going to be funded for that whole three-year period," he said, adding, "There is a lack of genuineness to recruit somebody if you don't know if they're going to be able to finish their training. ... Today we are focused on the short term but we really have to fix that long-term."

NCHC President John Rother said advocates are hoping that funding for the programs will be included in legislation to reauthorize federal funding for CHIP, which also is set to expire Sept. 30.

Funding for safety-net hospital program also at risk

Other advocates are raising concerns that disproportionate share hospital (DSH) payments face a $43 billion cut on Oct. 1—and are urging lawmakers to take action to prevent the reductions, STAT News reports.

The payments help offset safety-net hospitals' costs for providing uncompensated care to low-income patients. The Affordable Care Act (ACA) called for DSH payments to be reduced over an eight-year period. However, lawmakers over the past three years passed legislation to keep the cuts from taking effect. Currently, $43 billion in DSH payment cuts are scheduled to take effect on Oct. 1.

According to STAT News, some hospital administrators have said they could be forced to scale back or close departments, postpone plans to build new treatment centers, or eliminate preventive care programs if the DSH payment cuts take place. For instance, John Haupert—CEO of Grady Health System, which would face at least $11 million in DSH payment cuts in 2018—said the health system could have to close its obstetrics and gynecology clinic or its mental health department, which is the second-largest mental health provider in Georgia.

Larry Antonucci, president and CEO of Lee Health, said in the face of the cuts the health system is considering delaying plans to expand its facility by 250 beds and to open a cancer center and clinics in underserved areas.

Beth Feldpush, SVP of policy and advocacy for America's Essential Hospitals, said the payment reductions "would be absolutely devastating." She continued, "If these cuts move forward, it's going to be very hard for safety net hospitals to continue to offer services to those in their communities who otherwise don't have access to everything from primary care visits to emergency care services."

Hospital administrators in a letter sent last week to leaders in Congress urged lawmakers to delay the cuts for another two years, but Feldpush said senators are not thinking about the cuts because they are focused on Republican efforts to repeal the ACA. In the House, three lawmakers on Thursday circulated a letter urging their colleagues to act quickly to delay the payment cuts, STAT News reports.

Sean Brown, vice president of communications for the Federation of American Hospitals, said if lawmakers fail to delay the cuts before the Sept. 30 deadline, they could address the issue "retroactively." Still, he said, "It would be best for Congress to deal with the DSH delays before the deadline" (Frieden, MedPage Today, 9/20; Blau, STAT News, 9/22; Frost, Brooklyn Daily Eagle, 9/25).

New: Quick reads for CFOs on top-of-mind finance topics


At the end of every quarter, we compile the research notes we've featured as "CFO guides" in the few preceding months into one document, so you can download them all in one place.

Click on the following finance topics, such as 2017 Hospital Revenue Cycle Benchmarks and CMS's Proposal for Hospital Outpatient Payments, to find the individual research notes and the bundled briefings we produced each quarter.

Download Now

Have a Question?


Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.