Congress faces a Sept. 30, 2019 deadline to decide what to do about the so-called DSH program as the long-delayed cuts mandated by the Affordable Care Act are slated to start on Oct. 1.
Congressional Medicaid advisers in January will formally present recommendations on what lawmakers should do about the program, including a proposal to phase in the scheduled cuts slowly and change the way HHS structures the cuts for each state.
With less than two weeks left in the 115th Congress, Rubio will have to re-introduce the legislation when lawmakers reconvene in January. But this early proposal will stand as a marker for negotiations as hospitals in states that benefit most from the current formula grapple with what, if anything, they are willing to concede.
Florida receives one of the lowest DSH allotments in the country under the current formula, which Congress hasn't tweaked since the early 1990s.
States see a huge variation in their DSH payments, which intensifies the politics of changing the funding formula as each lawmaker will likely side with his or her state interests. The DSH cuts were set by the ACA because Medicaid expansion was supposed to cover more lives, giving hospital margins a significant boost as their uncompensated-care costs fell.
But as some states refused to expand and hospital pressure mounted, Congress delayed the cuts before they were slated to start in 2014. Lawmakers have delayed them ever since, but in a spending bill early in 2018 they authorized just a one-year delay and teed up an opportunity to change the funding formula.
States with the biggest share of DSH funding are also the states that would face the biggest cuts if they go into effect. They are a range of expansion and non-expansion states and include Alabama, Missouri, New York, New Jersey and South Carolina.
Current DSH law has influenced Florida's overall healthcare policy. The state's relatively low share in the funding led policymakers to create its "low-income pool" to offset uncompensated-care costs.
The low-income pool became a political football during the Obama administration when Florida refused to expand Medicaid. HHS significantly cut back on federal funding for the program, which the Trump administration boosted last year.
The current DSH formula has been in litigation since the Obama administration told hospitals they have to deduct the money they earn from commercial insurers from their total allotment.
A federal judge sided with the Missouri hospital lawsuit to block the claw-back of money but the Trump administration has appealed and the matter is still pending.
