March 2019 Report to Congress on Medicaid and CHIP

The March 2019 Report to Congress on Medicaid and CHIP addresses Medicaid hospital payment policy, focusing on disproportionate share hospital (DSH) and upper payment limit (UPL) supplemental payments. Medicaid spends more on hospital services than any other type of service; these accounted for one-third of total Medicaid spending in fiscal year (FY) 2017.

Chapter 1 addresses FY 2020 reductions to disproportionate share hospital (DSH) allotments; this funding enables states to make supplemental payments to offset the cost of uncompensated care. The Commission makes three recommendations to minimize the impact of the cuts on safety-net hospitals and better align the existing allotment methodology with the cost of uncompensated care.

Chapter 2 examines upper payment limit (UPL) payments, a significant source of Medicaid funding for hospitals, exceeding DSH payments in FY 2017. In this chapter, the Commission recommends actions to improve oversight of hospital-specific UPL demonstration data, to ensure they are complete, accurate, and linked to the process used for claiming expenditures for the purposes of federal match. In addition, MACPAC calls for the release of hospital-specific UPL demonstration data in a standard format that provides the public with access to the data.

Chapter 3 contains MACPAC’s annual statutorily required DSH analysis. The analyses in this chapter underscore the Commission’s prior findings that DSH allotments have little meaningful relationship to measures of uncompensated care at the state level. Much of the variation in state DSH allotments reflects their basis on historic patterns of spending. The analysis also finds that CMS’s methodology for implementing DSH allotment reductions would preserve most of this historical variation.