Medicare Disproportionate Share Hospital Payments - Essay Example

Medicare Disproportionate Share Hospital Payments Medicare Disproportionate Share Hospital Payments In a bid to provide healthcare facilities with funding and a little bit of compensation, the United States government came up with the Medicare Disproportionate Share Hospital (DSH) Payment programs, thus; ensuring that hospitals in both rural and general areas get funds for all uninsured patients. The disproportionate share hospitals have, in the past, been responsible for catering to a large number of American citizens who are considered to be in the low-income earning bracket and the uninsured without being properly compensated for their efforts. In the Social Security Act, these hospitals are addressed in section 1886(d)(1)(B), where their compensation payments are divided by the Centers for Medicaid and Medicare Services (CMS) (NHPF, 2015). This paper will examine how the program has aided such hospitals, and how the revision of the program may affect the provision of services across the healthcare service field. As seen earlier, the American public, mostly the uninsured and the low-income earning Americans, receive their treatment and healthcare from disproportionate share hospitals. They are meant to receive payment for such services from the government through the DSH program. Unfortunately, the program has received criticism for not being able to accurately disburse these funds, making it difficult for these smaller hospitals to benefit from the program. The inaccuracy that has plagued this program has been a hindrance to the manner in which these hospitals operate and how they are compensated, thus; prompting a revision of the program. The designation of disproportionate share hospitals depends on the number of patients a hospital caters to, and how the patients fit into the criteria of lack of insurance and low-income (NHPF, 2015). This ultimately allows the said hospital to acquire additional funds. Since Medicaid coverage and eligibility differs to a great extent, the distribution of Medicare DSH payments tend to be uneven. Over 90 percent of the total DSH payments go to large hospitals and teaching hospitals in the urban areas, making it a highly concentrated process. Bearing this in mind, the Federal Government thought it wise to change this system to allow the hospitals to ‘earn’ the funds needed to cater to their number of uninsured patients and the low-income earning bracket. For some of the areas that record a significantly low number of uninsured or low-income earners, the Federal Government thought a revision would aid some of the other areas that have higher numbers get more funds. Under the Patient Protection and Affordable Care Act (PPACA), these states may see a decrease in the funds they acquire throughout the period of 2014 through to 2020. At that point in time, the reduction will be approximately over 50% of what is currently being seen in the revenue allocation at present time (NHPF, 2015). For the healthcare services, field and hospital executives, these reductions may be problematic. From a managerial point of view, the funds that were previously allocated to the disproportionate share hospitals are moving toward the health funds, which are now meant to cater to former uninsured persons. This implies that hospitals, those that are large and have designated DSHs, will have to earn their keep by making contracts with the specified health plans so that they can be in a position to remain neutral financially. After this revision was made through the Federal Government, the Supreme Court sought or moved to make the expansion of Medicaid a state’s option or choice. Unfortunately, under the PPACA and its provisions, there is no room for change when it comes down to reducing the payments and compensation to hospitals through this program (NHPF, 2015). In this instance, all the hospitals that decide not to expand their Medicaid programs will be caught under these reductions, which is problematic because, there is no guarantee that there will be a reduction in uninsured patients. Furthermore, there are no guarantees that a hospital, which chooses not to expand, will be compensated should the uncompensated care rates stay as they are, even as the decline or reduction in DSH funds continues (Redlener & Grant, 2009). The state or the Centers for Medicare and Medicaid Services cannot guarantee this, making it difficult for healthcare services to perform or provide for people in society as they are meant to. From the above, it is still not clear how they are even going to distribute the reduced funds to the disproportionate share hospitals. Hospital and healthcare service management have their work cut out for them, especially with an uncertain economic future. It is a new financing system, which will require hospital administrations and management to redesign their services to cater to the uninsured persons coming through their doors, and at the same time, find a number ways to reduce the costs that they incur after caring and catering to the number of persons in their care. Taking a look at the other side of the Medicaid expansion, when a number of healthcare facilities choose to expand, the number of persons that might be covered under the eligibility provision is bound to increase (Fishman & Bentley, 1997). What this means is that the federal government will have to pay or cater to this number of individuals from 2014 through to 2016. In such a case, the federal government has no problem paying, so long as the state pays its share of the Medicaid program. Since the Medicaid program is jointly funded by the federal and state governments, a lot of tension has existed between these two factions for a number of years. States have, in the past, been maximizing on the federal government’s funds through the DSH programs, intergovernmental transfers, and upper payment limit payments, which are all acceptable. However, the manner in which they have previously been utilized to increase the federal funds and not Medicaid services is the reason why revisions on certain programs are being implemented. The transfer of funds from the state to a healthcare provider usually entails movement of funding from the Medicaid program to the provider, who then holds on to the funds after delivering healthcare service (Coughlin & Liska, 1998). Problems occur when healthcare providers are the first to transfer funds to the state, and the federal government has to match this sum by returning these funds, with additional matching funds. The government ends up spending more on Medicaid than it should, especially when the healthcare providers do not offer supporting services to the Medicaid services the funds are meant to serve. With reduced or declining DSH funding, it is particularly difficult to offset some of the costs that will be incurred after taking care of the low-income earning bracket and/or the uninsured persons. In truth, some of the funding received is not a true reflection of what the state may spend on caring for the persons it is meant to. As a result of a decrease in the number of the uninsured, the Affordable Care Act (ACA) is keen on reducing allotments to give the federal government a chance to offset different states with a higher number of patients who are uninsured or low-income (Cleverley & Cleverley, 2010). This is because the ACA has increased or expanded the eligibility of adults to include those that fall under 65 years. These young adults will be catered to by the federal government till 2020 as the percentage of their compensation to the state is addressed with each fiscal year. Underinsured persons also fall under the category that requires DSH allotments. This group of persons does not receive lifetime benefits from some of the organizations they work for. This means that after the termination of their working contracts, they might not get all the benefits that come at the end, for example; for cancer treatments (Spivey & Kellerman, 2009). When such individuals fall sick, it is up to the state to ensure that they are treated, and their healthcare treatment procedures are taken care of through the ACA. Hospital administrations are therefore, tasked with the responsibility of taking care of such persons, but it is not a must for them to do so. When this occurs, the management of such healthcare facilities is placed with the burden of having to cater to a growing number of underinsured persons, without the possibility of having these costs met by the Medicaid program. In conclusion, Medicare Disproportionate Share Hospital (DSH) Payments are meant to aid the uninsured or low-income population in acute healthcare facilities get the proper treatment there is, without causing too much financial strain to the healthcare facility. Uncompensated care, in the coming years, may be problematic for people who work but do not receive full cover for some of their services (Iritani, 2010). These groups will eventually fall under the uninsured, low-income, or underinsured populations. The strain that they may cause on the healthcare and health systems may be immeasurable, but since the government is keen on revising their position on DHS payments, it is likely that this is where the state and local governments are headed. For the healthcare facilities that are carrying out uncompensated care to the different populations that cannot afford care, it is only a matter of time before their revised financial systems force them to reduce the number of patients they cater to. That being said, a large number of both people and healthcare facilities may be in for hard times should the DSH offsets decline in the coming years. References Cleverley, W. O. & Cleverley, J. O. (2010). Essentials of health care finance. New York: Macmillan Publishers. Coughlin, T. A. & Liska, D. (1998). Changing state and federal payment policies for Medicaid disproportionate share hospitals. Health Affairs, 17(3), 118-136. Fishman, L. E. & Bentley, J. D. (1997). The evolution of the support for safety-net hospitals. Health Affairs, 16(4), 30-47. Iritani, K. M. (2010). Medicaid: Ongoing federal oversight of payments to offset uncompensated hospital care costs is warranted. New York: DIANE Publishing. National Health Policy Forum (NHPF). (2015). The basics: Medicaid financing. Washington, DC: Author. Redlener, I. & Grant, R. (2009). America’s safety net and health care reform-What lies ahead? The New England Journal of Medicine, 361(1), 2201-2204. Spivey, M. & Kellermann, A. L. (2009). Rescuing the safety net. The New England Journal of Medicine, 360(1), 2598-2601. Read More