In the Journals

Medicaid losses at freestanding children's hospitals exceed those at other hospitals

Freestanding children’s hospitals are unlikely to offset decreased disproportionate share hospital payments that aid uninsured patients and patients receiving Medicaid compared with other types of hospitals, according to recently published study findings.

“The financing of pediatric health care may be uniquely affected by [disproportionate share hospital (DSH)] reductions,” Jeffrey D. Colvin, MD, JD, from the department of pediatrics, School of Medicine at Children’s Mercy Hospitals and Clinics at the University of Missouri, and colleagues wrote. “While almost one-fourth of all adults (20.6%) and practically all adults 65 years and older (96.2%) rely on Medicare coverage, more than one-third of children are insured by Medicaid.

“In contrast, compared with uninsured adults (17% of all adults before 2014), children without health insurance comprise a small percentage of all children (8%).”

To provide information on whether freestanding (FSCH) or teaching children’s hospitals had the higher number of Medicaid losses from caring for children that were recovered by DSH payments and to determine those losses, Colvin and colleagues conducted a retrospective, cross-sectional, 6-month analysis. The investigators’ study included Medicaid-insured hospital discharges for patients aged 20 years and younger in 23 states from pooled data in the 2009 Kids’ Inpatient Database during the period from March to September 2015.

Of 1,485 hospitals, 843,725 discharged patients were insured by Medicaid. The median number of FSCHs with Medicaid-insured discharges was 4,082 (interquartile range, 3,524-5,213) compared with general nonchildren’s teaching hospitals (674; IQR, 258-1,414) and general nonchildren’s nonteaching hospitals (161; IQR, 41-420). FSCHs experienced the largest median losses from Medicaid for children’s inpatient care (–$9,722,367; IQR, –$16,248,369 to –$2,137,902) compared with other two types of hospitals. DSH payments recovered a substantial amount and reduced their losses to Medicaid by almost half.

“It is unknown if the reductions in DSH payments will affect the ability of children’s hospitals to continue outreach across regions to serve patients with higher complexity regardless of payer,” the researchers wrote. “However, for all hospital types, the effect of DSH payment reductions will depend greatly on the decisions of state and local policymakers, including individual state decisions about the allocation of DSH payments and the use of supplementary local funding to offset losses from uncompensated care.

“In addition, any increases in Medicaid reimbursement to the level of actual costs or to Medicare levels would greatly alter the effect of DSH reductions.” – by Kate Sherrer

Disclosure: The researchers report no relevant financial disclosures.