Additional payments meant to stabilize hospitals in the safety net are often misallocated, a new study finds.
Nearly one-third of Medicaid’s disproportionate share of hospital payments in 2015—latest data available—did go to hospitals that provide lower-than-average no-cost care in the United States. their respective states, according to an analysis of DSH payments data from 2011 to 2015 published Monday in the peer-reviewed journal Heath Affairs. Uncompensated care is the sum of a patient’s unpaid bills known as bad debt and charity care.
More than 3% of the $14.5 billion distributed in Medicaid DSH payments in 2015 went to hospitals that did not meet any of the criteria related to unpaid care, which met meet the state-specific median threshold for Medicaid use and/or achieve a low-income utilization rate of at least 25%, according to the study. The program should be tweaked, for example, by increasing transparency or consolidating Medicare and Medicaid’s DSH programs, the researchers say, to ensure that hospitals with the greatest need receive the services. additional payments.
DSH payments represent an element of a complex state and federal financial system that helps hospitals care for the most vulnerable—but research has shown it can. failure. For example, state agencies can pay DSH to government-owned hospitals and remit those payments back to the state Medicaid agency through an intergovernmental transfer.
Part of the problem is that these financial mechanisms are often hidden in “black boxes,” says Dr. Paula Chatterjee, assistant professor of medicine at the University of Pennsylvania and lead author of the study.
“Step one here is to make the data on DSH more transparent,” she said. “States have a lot of flexibility in implementing programs, but we don’t know much about the decision-making process at the state level.”
Another option, Chatterjee said, is to combine separate DSH plans for Medicare and Medicaid patients or move the payment system away from usage-based criteria. But the latter will need congressional approval.
Additional payments such as DSH’s attempt to distribute funding at the hospital level tend to experience a lot of “price slippage,” in which funds are distributed to facilities, said Katherine Baicker, dean of the University of Chicago. did not focus on the group of patients originally intended. Harris School of Public Policy and a professor of healthcare economics who was not affiliated with the study.
“It is very difficult to target spending through programs like DSH to focus on increasing resources for the most needy patients and their service providers,” she said.
Academic medical centers accounted for a large portion of the 31.6% hospitals that received Medicaid DSH payments in 2015 but did not meet the median threshold for no-charge care in similar states. their response. Chatterjee said many of these institutions have strong operating margins and may be eligible for other payments such as graduate medical education funding.
“Reallocating funding from this pool may present a better opportunity than transferring payments from rural hospitals that tend to rely more on these funds,” she said.
Katherine Hempstead, senior policy advisor at the Robert Wood Johnson Foundation, a nonprofit research center, said using uncompensated care to determine DSH funding could be a mistake. omission. Two hospitals may have the same number of patients, she said, but if one costs more, it looks like they are providing more unpaid care.
“There are a lot of ways a hospital can ‘game’ it up to make it look like they’re doing more than they’re actually doing,” says Hempstead.
If hospitals in the safety net do not receive their fair share of additional payments, they may be forced to join a larger system, reduce services, or close.
Last month, Marietta, Georgia-based Wellstar Health System closed Atlanta Medical Center, a 460-bed hospital that burdened the region with disproportionate care. Wellstar executives said the hospital could not sustain declining revenues and rising labor and supply costs.
“Targeting DSH funding appropriately is related to the viability of these hospitals,” says Chatterjee.
DSH allocations to states are largely based on initial calculations from 1992 and likely do not reflect the needs or current context of states, the researchers say. Edwin Park, a research professor at Georgetown University, said the statutes had not been meaningfully updated in more than 20 years.
“This study certainly demonstrates the arbitrary nature of the limit based on past spending with no updates,” he said.
