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Pressure mounts on expiring Medicaid programs for U.S. territories, safety net hospitals

Advocates worry the two programs will need more funding by the end of the fiscal year

Participants hold signs during the Senate Democrats’ rally against Medicaid cuts in front of the U.S. Capitol on June 6, 2017. Advocated are worried about two Medicaid programs that need additional funding before the end of the fiscal year — U.S. territories’ programs and funding for safety net hospitals. (Bill Clark/CQ Roll Call file photo)
Participants hold signs during the Senate Democrats’ rally against Medicaid cuts in front of the U.S. Capitol on June 6, 2017. Advocated are worried about two Medicaid programs that need additional funding before the end of the fiscal year — U.S. territories’ programs and funding for safety net hospitals. (Bill Clark/CQ Roll Call file photo)

Advocates are worried about two Medicaid programs that need additional funding before the end of the fiscal year — U.S. territories’ programs and funding for safety net hospitals.

The end of September marks a number of government deadlines, but advocates and government officials worry that a lack of funding for these two Medicaid programs would be worrisome and could be overlooked.

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The United States’ island territories such as Puerto Rico and the Northern Mariana Islands have a different funding structure for their Medicaid programs than states. The 2010 health care law and a 2018 bipartisan budget law provided temporary additional funding to some of these areas, but much of it expires at the end of September.

“This is an issue that has to be addressed,” said Robin Rudowitz, associate director for the Program on Medicaid and the Uninsured at the nonpartisan Kaiser Family Foundation. “The uncertainty is also problematic.”

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Separately, the scheduled cuts for safety net hospitals that primarily serve low-income individuals are causing lawmakers and hospital trade groups to seek a delay.

Hospitals that receive so-called disproportionate share, or DSH, payments serve large populations of uninsured individuals. The DSH program provides some funding for qualifying hospitals to offset uncompensated care costs.

The 2010 health care law called for cuts to these payments, under the assumption that all states would expand their state Medicaid programs. However, the Supreme Court ruled in 2012 that states were not required to expand, but left the cuts in place.

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Territories’ funding

U.S. territories’ Medicaid programs receive a fixed matching rate of federal funding, unlike the states, which have matching rates that can rise when poverty increases. If a territory exceeds that fixed cap, the territory is responsible for 100 percent of future costs.

Republican Jenniffer González-Colón, Puerto Rico’s nonvoting delegate in Congress, said that if the federal government applied the same formula it uses for states, it would have to provide an 83 percent matching rate in Puerto Rico rather than the current 55 percent.

In 2017, the federal government spent $1,855 per Medicaid enrollee in Puerto Rico, compared to $7,248 for the national average, she said.

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Puerto Rico and the U.S. Virgin Islands are still dealing with the after effects of Hurricanes Irma and Maria. The Senate is separately still attempting to agree on package of supplemental disaster aid funding.

If funding isn’t continued in a timely manner, some officials have said they may have to cut optional services, such as prescription drug coverage and dental services.

“If they don’t get their medications, then eventually they will end up at our hospitals, which will cost us more money in inpatient services,” said Helen Sablan, the Medicaid director for the Northern Mariana Islands.

Rudowitz, of the Kaiser Family Foundation, said even doing that wouldn’t make up the entire shortfall. She predicts that significant and fundamental changes would need to be made to the program.

The House Natural Resources Committee held a hearing Thursday on funding for these areas — although the panel doesn’t have jurisdiction over Medicaid.

“The impending loss of the extra Medicaid money provided to all the insular areas by Obamacare will have too profound an impact to wait for another committee to take action,” Gregorio Kilili Camacho Sablan, the Northern Mariana Islands’s independent delegate, said in a statement.

It’s unclear when a markup or floor vote on any legislation will happen.

Historically, Congress has provided short-term funding for some health programs in recent years while finding agreement among lawmakers on a bipartisan long-term solution.

Funding for the Children’s Health Insurance Program and other social-net programs expired Sept. 30, 2017, but a long-term plan was only enacted in January 2018.

Similarly, some smaller Medicaid programs, such as Money Follows the Person, had their funding lapse in fiscal 2016 — though states have been allowed to use leftover funds until 2020. Congress has since provided some short-term funding for that program, which provides funds for individuals to move out of assisted living and back into their community.

Medicaid’s spousal impoverishment program will also run out of short-term funds at the end of the fiscal year.

The short-term fixes and living without certainty make it more difficult to address some underlying issues, such as the risk of providers leaving the programs, said Rudowitz.

“If the Congress does not act, Puerto Rico would suffer from a massive migration of sick patients to the United States seeking to solve and receive treatments for their health conditions. On the other hand, our health service providers would be practically destined to look for employment opportunities in other countries to be able to sustain their professions,” Gloria del C. Amador, executive director for Salud Integral en la Montaña, a federally qualified health center in Puerto Rico, told CQ Roll Call.

Because of the way that financing for Medicaid reimbursement is structured, the territories’ Medicaid programs do not offer competitive physician salaries compared to the mainland, especially for specialists. Similarly, health care infrastructure in some territories is not as developed as in the states.

Recruiting providers is difficult because of the remote island setting, small scale, territorial status, lower physician salary, and the high cost of malpractice insurance, said Sandra King Young, Medicaid director for the government of American Samoa.

The congressional delegates from these areas are looking at solutions.

A bill from Democratic Del. Stacey Plaskett of the U.S. Virgin Islands would sunset the Medicaid cap on funds and eliminate the specific federal matching levels used for the territories.

Another bill from González-Colón would strengthen the Medicaid program in Puerto Rico.

The House Energy and Commerce and the Ways and Means committees have not indicated if and when they would take up either bill.

Hospital funding

Congress has intervened to delay the safety net hospital cuts, and could do so again. If it doesn’t, the program faces a $4 billion decrease in funding for fiscal 2020, with that number jumping to $8 billion for fiscal 2021 through 2025. Next year’s cuts would eliminate one-third of current funding.

Laura Grill, president of East Alabama Medical Center, says the impact will be especially hard in her state, which did not expand Medicaid. About 325,000 patients would be covered if Alabama expanded its program, but that is not expected to happen, so safety net hospitals like hers are instead responsible for uncompensated care.

The net DSH impact for fiscal 2018 for her organization is $11.1 million, she said.

Last week, a bipartisan group of 300 lawmakers sent a letter to House leadership urging for a two-year delay.

“Until a more sustainable, permanent solution is reached, we ask that you work to delay these cuts for at least two fiscal years. This delay will ensure that hospitals can continue to care for the most vulnerable in our communities,” the letter led by Reps. Eliot L. Engel, D-N.Y., and Pete Olson, R-Texas, reads.

A group of 13 advocacy organizations similarly called for a delay of two or more years in a separate letter to congressional leaders.

“Congress has repeatedly recognized the importance of Medicaid DSH payments by delaying cuts to the program. Congressional lawmakers have demonstrated their understanding of the destructive impact these cuts could have on hospitals that serve patients and communities on the front line of the health care safety net,” says the letter from the groups, including America’s Essential Hospitals and the National Rural Health Association.

Mitchell Katz, president of NYC Health + Hospitals, spoke last week at a congressional briefing on the impact of acting soon to delay the DSH cuts. Katz said that while federally qualified health centers, or FQHCs, do take on some uninsured patients, individuals especially rely on hospitals like those in his health system for specialty care.

“By definition, FQHCs are primary care. There are no oncologists,” he said.

Matthew Gutwein, president of Health and Hospital Corporation of Marion County in Indiana, said the impact of the opioid crisis has led to the need for more specialized services, which are funded by DSH and grants.

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