‘Safety Net’ Hospitals Face Federal Budget Cuts
A double whammy of federal budget cuts might force many hospitals, particularly those that serve poor or rural communities, to scale back services or even shut their doors.
The
The cuts are in addition to other losses of federal funds as a result of
"They are placing our already fragile health system in jeopardy," said
The cuts come at a time when many rural hospitals already are struggling to keep their doors open. Since 2010, 83 rural hospitals have closed across
Officials at some rural hospitals say Medicare, the health plan for Americans 65 and older, doesn't reimburse them adequately. "We deliver the same services as you'd get in big cities in
Cuts to Two Programs
Starting
For example,
Over the years, the number of health facilities qualifying for the program has grown rapidly. Between 2001 and 2011, the number of 340B facilities roughly doubled, to about 16,500 sites, according to a study published in Health Affairs in 2014. The
But as the numbers increased, so did complaints about how the program operated. According to the Health Affairs study, more and more of the hospitals that were gaining 340B status served communities with fewer lower-income patients than the earlier 340B hospitals.
The newer 340B hospitals, the study suggested, were using their 340B status not to help poorer communities, but to push into more affluent, profitable areas.
In its testimony last year, the GAO recommended tightening the requirements for gaining 340B status. The pharmaceutical industry, which loses money because of the discounts, also lobbied hard for more restrictions for qualifying as a 340B hospital.
But the Trump administration went further. In November, it announced the 27 percent cut to the 340B program. Money that once went to 340B hospitals will now be distributed far more broadly, to most hospitals.
In announcing the rule change,
Medicaid's
In 2017, the federal allotment for DSH payments was
Under the Affordable Care Act, the hospital program was supposed to gradually wither away, since Medicaid expansion and subsidized health insurance through the ACA's health insurance exchanges was supposed to make it unnecessary.
However, after the
Even states that expanded Medicaid under the Affordable Care Act will feel the reduction.
For example,
States that did not expand Medicaid did not experience as sharp a drop in uncompensated care, so the impact of the cuts will be even more profound. In
Other states where projected DSH cuts would exceed the savings on uncompensated care are
Impacts of Cuts
At the 248-bed
The situation is also serious for
Other hospitals mentioned the possibility of cutting back on the number of social workers, follow-ups with patients after discharge, and transportation services to help poor patients get to medical appointments.
Not all the affected hospitals are in rural areas.
Not every state is facing such dire impacts from the cuts, however. In
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