Because a gridlocked Congress won’t be passing a new budget anytime soon, the U.S. Department of Health and Human Services finalized a rule Friday for $1.1 billion in Medicaid cuts to hospitals under the Affordable Care Act, cuts that could hit hospitals particularly hard in states that don’t expand Medicaid through the law.
President Obama proposed postponing the cuts one year in his FY 2014 budget because not every state is expanding Medicaid as originally planned. The cuts, which are to payments for hospitals that perform a lot of uncompensated care, were included in Obamacare because the law would cover more people, decreasing the overall amount of uncompensated care.
The president’s proposal reflected the reality that 20-plus states have refused to expand Medicaid coverage under the health care reform law. If the cuts went into effect, hospitals in those non-expanding states would receive smaller reimbursements from HHS without the compensatory expansion of coverage.
But without a new budget from Congress, HHS wasn’t able to implement the president’s proposal.
“HHS has no flexibility to institute a delay of the DSH allotment reductions without congressional action,” the rule released Friday said.
The department did decide to only finalize the cuts for FY 2014 and 2015, opening the opportunity for reevaluation after the effects of non-expansion can be assessed.