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Protect Medicaid DSH Funding for Public Health Care Systems

State Leaders Sign Letter to California Congressional Members

Federal Medicaid Disproportionate Share Hospital (DSH) payments support safety net hospitals, including public health care systems, providing over $1.2 billion in California. These payments play a central role in public health care systems’ ability to provide care for the remaining uninsured.

Medicaid DSH has allowed public health care systems to shift care delivery away from costly emergency and inpatient departments to more appropriate and effective care settings, focusing on outpatient services such as primary and preventive care. Using DSH funds, public health care systems have been able to expand their capacity to reduce wait times, expand clinic hours, provide non-traditional services such as e-consult and telehealth, utilize mobile outreach, and offer same day appointments.

Despite the critical role of Medicaid DSH, this funding is at risk for the safety net in California. Since 2013, Congress has acknowledged the importance of Medicaid DSH funding by delaying the scheduled cuts through legislation; however, the cuts are scheduled to take effect again starting this October 2019, absent any further federal action.

Public health care systems stand to lose an estimated $330 million in federal funding in the first year. Starting in 2020, Medicaid DSH cuts will double and continue through 2025.

To address this, members of the California Legislature submitted a letter urging their Congressional colleagues to work together to again delay the Medicaid DSH cuts, so that low-income uninsured and Medi-Cal patients can continue to have access to patient-centered, quality care delivered in the most appropriate setting.

In addition, a federal bipartisan Dear Colleague letter is circulating in the House of Representatives that echoes this request to delay Medicaid DSH cuts. The deadline for signatures is May 3rd.

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