Friday, February 7th 2003

Dear Member of Congress:

The undersigned organizations are writing to urge the immediate enactment of Medicaid Disproportionate Share Hospital (DSH) legislation to avoid a massive reduction in funding for state Medicaid programs.  Medicaid DSH is one of our nation’s few sources of financing for the organizations that serve our most vulnerable people – America’s poor, sick and elderly, many of whom are Medicaid beneficiaries,   uninsured or underinsured.  Cutting DSH jeopardizes their ability to get the care they need even as the number of uninsured people is rising and state budgets are shrinking.

Remedying the current cuts is essential to ensuring that Americans in many communities continue to receive vital services such as trauma and burn care, high-risk neonatal care and specialty children’s care.  Current law has caused drastic reductions in fiscal year 2003 Medicaid DSH allotments.  The amount of federal funds that may be used for DSH payments in FY 2003 has dropped by more than $1.1 billion, representing an 11.5 percent reduction. This reduction has happened because the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act provided 37 states only temporary relief (for FY 2001 and 2002) from cuts imposed on them by the Balanced Budget Act of 1997. The remaining states have been suffering for years under unconscionably low DSH payment levels, and therefore do not have sufficient DSH allotments to meet the needs of their low-income and uninsured people.

The undersigned organizations support immediate action to address current fiscal year DSH issues, including action on the FY 2003 omnibus appropriations legislation to forestall Medicaid DSH cuts for one more year, and an increase in low DSH allotments to 3 percent of Medicaid spending.  In addition, we encourage the committees of jurisdiction in both houses of Congress to request budget allocations that more permanently address significant deficiencies in DSH funding.

In the last Congress, 191 members of the House of Representatives and 27 members of the Senate cosponsored bipartisan legislation that would have permanently eliminated the FY 2003 “cliff” in Medicaid DSH funding.  Many others supported increased allotments to those states that receive historically low payments.  Clearly, there is broad support for this critical action.  We strongly urge you to move Medicaid DSH legislation as soon as possible.

Thank you for your attention.


American Hospital Association
Association of American Medical Colleges
Catholic Health Association of the United States
Federation of American Hospitals
Healthcare Financial Management Association
National Association of Children’s Hospitals
National Association of Psychiatric Health Systems
National Association of Public Hospitals and Health Systems
National Association of Urban Hospitals
Premier, Inc.
VHA Inc.

The following letter was sent to all House and Senate Members

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