Hospitals are facing a cash shortfall after it was announced that funding handed out through the government’s Disproportionate Share Hospital (DSH) program, which provides money to facilities that treat indigent individuals, will continue to be based on data from nearly five years ago, when hospitals had historically low levels of bad debt.
The amount of bad debt at not-for-profit hospitals is projected to represent 8% of their net patient revenues in 2019, up from 5% in 2015, according to a published report. The increase was 1.2% between 2017 and 2018, which represented an average of $665 per discharged patient.
Unfortunately, hospitals are partly to blame for the amount they will be receiving. Hospitals pushed for the government to begin using audited financial data instead of unaudited data because the unaudited data could contain mistakes, which could have resulted in hospitals being forced to repay money back to the government if any mistakes were found. However, the most recent audited data is only available from 2015.
The Centers for Medicaid and Medicare Services (CMS) is auditing a new form hospitals are using to detail their uncompensated care data. Weeding out those inconsistencies is what has led to the use of data from 2015 instead of a more recent year, when the amount of unpaid debts would be higher.
The amount of bad debt from 2015 was lower because of the enactment of the Affordable Care Act, leading more individuals to have health insurance. But the amount of individuals without health insurance has climbed steadily in the past few years, which has also increased the amount of uncompensated care at hospitals across the country.