Just a small $12B Cut - will DSH reductions happen this time?

January 28, 2023 - The hospital industry is bracing for significant reductions in payments under the Medicare Disproportionate Share Hospital (DSH) program. The DSH program provides additional payments to hospitals that serve a large number of low-income patients. However, the program has been targeted for cuts as part of broader efforts to reduce healthcare spending.

The reductions, which are set to take effect in the coming years, could have a major impact on the financial stability of many hospitals. The cuts are expected to total around $4 billion in the first year, with even larger reductions in subsequent years.

Hospitals that serve a large number of Medicaid patients are particularly vulnerable to the cuts. These hospitals already operate on thin margins and rely heavily on DSH payments to stay afloat. The reductions could force some of these hospitals to close or significantly scale back their operations.

The cuts are also likely to have a negative impact on access to care for low-income patients. Hospitals that are forced to close or scale back their operations will no longer be able to provide care for these patients, and other hospitals may be unwilling or unable to absorb the additional patients.

Hospitals are lobbying Congress to delay or repeal the DSH cuts, but it is unclear whether these efforts will be successful. In the meantime, hospitals will need to prepare for the possibility of significant reductions in DSH payments and look for ways to reduce costs and increase revenue.

Overall, the DSH cuts are likely to have a significant impact on the hospital industry and could have serious consequences for low-income patients. It is important for hospitals to prepare for these reductions and for policymakers to consider the potential consequences before moving forward with the cuts.