Hospitals Serving Poor May Lose Millions

Missouri hospitals that serve large numbers of poor patients may lose millions of federal dollars due to the enactment of the new federal health care law – the Affordable Care Act (ACA). The ACA reduces the federal payments hospitals currently receive for providing uncompensated care to the poor.

Backers of the ACA legislation, which became law in 2010, initially envisioned that the reductions in the uncompensated share hospital (DSH) payments would be offset by an expansion of Medicaid, the joint federal state program that provides health coverage for the poor, the elderly and disabled. Under this scenario, previously uninsured patients would have Medicaid and Medicaid would reimburse the hospitals.

But due to a U.S. Supreme Court ruling this past summer, the Medicaid expansion is no longer mandatory for states. Each state can choose whether or not to expand its Medicaid program. If Missouri chooses not to expand Medicaid and the DSH payment reductions remain in place, hospitals in Missouri face serious financial challenges. Some observers believe undercapitalized hospitals, such as smaller ones in rural areas, could close down.

Nationally, a total of $18 billion will be lost in DSH payments between 2014-2020, according to the Commonwealth Fund, a private foundation that provides analysis of health care issues. Exact figures for how much Missouri hospitals will lose is uncertain at this time but could run into the millions. For fiscal year 2013, Missouri hospitals are receiving $784 million in federal DSH payments.

Next year the general assembly will grapple with all of these concerns.

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