Feds Plan State Medicaid Allotment Reductions

WASHINGTON (CN) - In anticipation of more Americans obtaining health insurance under the Affordable Care Act, the Department of Health and Human Services proposed a method that would implement future annual Medicaid reductions.

Millions of Americans will have access to health insurance coverage through qualified health plans offered through marketplaces or through Medicaid, governed by the Affordable Care Act.

The Department of Health and Human Services expects that the increased access to health insurance will significantly reduce levels of uncompensated care provided by hospitals.

"On the assumption that the number of uninsured people will fall sharply beginning in 2014, the statute reforms an existing initiative under the Medicaid program to address the situation of hospitals which serve a disproportionate share of low income patients and therefore may have uncompensated care costs," the department wrote in its proposed rule.

The department is required to implement aggregate reductions in annual state allotments of federal funding for disproportionate share hospital payments by reducing the annual allotments.

The Affordable Care Act requires annual aggregate reductions in federal funding for those hospitals from the fiscal years of 2014 through 2020.

For 2014, the aggregate reduction amount is $500 million.

The rule also provides significant financial support for states to extend their Medicaid coverage for low-income adults. States that implement a new coverage group will receive full Medicaid reimbursements, the department wrote.

"Implementation of the new coverage group is expected to affect the amount of uncompensated care and the percentage of uninsured individuals within states. Generally, we expect that states that do not implement the new coverage group would have relatively higher rates of uninsured, and more uncompensated care, than states that adopt the new coverage group."

The department noted that it does not have sufficient information about the effects of those decisions, and proposed the methodology only for the first two years of funding reductions.

Comments on the rule can be submitted before July 12.

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