Three letters “DSH” – may be the undoing of rural hospitals

The congressional battle to expand Medicaid in Missouri is making rural hospitals that serve areas with high poverty levels really, really nervous.

Rural hospitals are in a unique position regarding the Medicaid expansion. The 2010 Health Care Law, known as the Affordable Care Act, called for a Medicaid expansion for low-income adults. The US Supreme Court ruled that the expansion was optional for states so the expansion is not mandatory.

The federal government currently designates hospitals as Disproportionate Share Hospitals, or “DSH”.  DSH hospitals receive payments from the federal government to offset the charity care it provides. Charity care is health care that isn’t paid for, usually because the patient doesn’t have money or insurance. At a hospital like GVMH, the DSH money doesn’t cover all the cost of charity but it does cover a portion.

When the federal health care law was passed, it included a 75 percent cut in those DSH payments.  That’s because another part of the health care law – the Medicaid expansion part – was supposed to make up for the reduction. The theory: more people covered by Medicaid = less charity care – and less of a need for DSH payments.   This is a bit misleading because cuts to Medicare are going to outweigh DSH payments significantly but a this point every dollar makes a difference. 

What lawmakers didn’t factor in was the U.S. Supreme Court’s later decision that states didn’t have to expand Medicaid. Now many Missouri Hospitals are set to lose significant DSH payments and if Missouri lawmakers refuse to expand Medicaid rural hospitals will really suffer.  You must keep in mind that regardless of DSH payments or Medicaid expansion rural hospitals will still be providing care to patients who have no ability to pay.

Here’s where “DSH” becomes make or break.  I was in Jeff City last week meeting with local legislators and I was trying to help them understand the importance of Medicaid expansion.  One of the legislators said “I see that the President has proposed to continue DSH payments for one more year, so you don’t really need Medicaid expansion to stay viable”.

I tried to help him understand the flaw in his thought process.   The reduction of DSH payments was supposed to be offset by Medicaid expansion but the truth is, cuts to Medicare will impact hospitals more than the loss of DSH payments and legislators opposed to Medicaid expansion are now clinging to the extension of DSH for one more year as yet another reason to oppose Medicaid expansion.

I believe in our system of government which is why what I’m about to share with you was very disheartening.  When speaking with one of our legislators I asked that he just be objective and listen to his constituents when it comes to Medicaid expansion, he told me that he was ideologically opposed to the expansion and he would vote his conscience not the desire of his constituents and he would rather be a one term legislator than support the expansion…..

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Executive Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. At GVMH we care for our families, friends and neighbors. We're committed to providing the safest, friendliest and most compassionate care to all we serve.
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