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AIM Supports Resolution Asking Federal Government to Release DSH Payments

“DSH” payments, or “disproportionate share” payments, are currently used by hospitals and other healthcare providers to help offset the cost of uncompensated care – the cost of healthcare services provided to people that do not pay.

Hospitals must treat people regardless of whether they receive payment.  When people receiving services do not pay, that cost is referred to as “uncompensated care.”  The federal government has historically provided money to providers to help offset the cost of uncompensated care which totaled $1.1 billion in Missouri in 2011.  The federal government, under authority of Obamacare, will cut these payments to healthcare providers by $3.4 billion over the next seven years.  A large portion of the cost for this uncompensated care will need to be recovered by healthcare providers through higher costs for healthcare services.  Employers will pay these costs either directly (for companies that are self-insured) or indirectly through higher insurance premiums.

Two concurrent resolutions have been filed in the Missouri legislature to ask the federal government to release this $3.4 billion in DSH payments.  AIM testified in favor of one of those resolutions Wednesday, HCR 17, filed by Representative Keith Frederick (R-121).  Resolutions do not have any real legal effect, but they express the will of the Missouri General Assembly and are often used to communicate strong messages to the Missouri Congressional delegation, other members of Congress, and the President.

To offset the loss to healthcare providers caused by the federal government’s withholding of DSH payments, the federal government is offering additional money to states to expand Medicaid coverage for those that earn up to 133% of federal poverty level – those single workers making up to $15,282 per year. These federal payments would help offset the cost of uncompensated care by covering more individuals and allowing them to seek healthcare earlier, rather than waiting until their health problems become more serious, in addition to providing the state more money.

“The action taken by the federal government in withholding DSH payments will result in higher healthcare costs for employers,” said AIM President/CEO Ray McCarty. “By approving this resolution, you can send a strong message to the federal government that you object to this action, which really amounts to nothing less than extortion.”

McCarty responded to a question by one committee member that asked about the federal government increasing financing to states to expand Medicaid.  McCarty responded that all money at the federal level is borrowed money, which hurts all taxpayers in the long run, and that the federal government is playing games with taxpayers by this self-created emergency.

Because we have no other choice under the current federal rules, AIM is supporting the expansion of Medicaid with one very important caveat: the state must use this opportunity to increase the efficiency of the Medicaid system. “The current system is inefficient and the Missouri legislature can turn this bad situation into a positive by taking this opportunity to increase efficiency, reduce duplicative services, and to truly examine and eliminate waste, fraud and abuse,” said McCarty.  “Previous attempts at Medicaid ‘reform’ have amounted to no more than simplistic budget reductions that did not address the best way to spend resources.”

A similar concurrent resolution, SCR 5, was filed in the Senate by Senator John Lamping (R-24, St. Louis County).

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