News Release

Thursday, June 28, 2012

Contact: Ridgely Ingersoll, (757) 668-9087

Statement from CHKD on Supreme Court’s decision on Affordable Care Act

HAMPTON ROADS, Va - With the Supreme Court’s ruling today to uphold the Affordable Care Act, we know that many of you may have questions about how this historic decision affects CHKD and the children we serve.

The Affordable Care Act brings important benefits to children, such as insurance reforms guaranteeing coverage of preventive care, prohibiting denials based on pre-existing conditions, prohibiting annual and lifetime limits on coverage and allowing individuals to stay on their parents’ insurance plans until age 26.

While we welcome these positive changes, we remain concerned about a provision of The Affordable Care Act that could have significant impact on CHKD. The Affordable Care Act includes significant reductions to disproportionate share hospital (DSH) payments beginning in 2014. DSH is intended to provide financial assistance to hospitals that serve a significantly disproportionate share of low-income patients. CHKD’s statistics speak for themselves:

  • More than half of CHKD’s inpatient population is covered by Medicaid.
  • CHKD’s Medicaid inpatient utilization is nearly double that of the next closest provider in Virginia.
  • CHKD received $18.6 million in DSH payments in 2011
  • Even with these DSH payments, CHKD still sustained an $11.5 million shortfall between payments from Medicaid and the cost of providing care to our patients.

The reduction in Medicaid DSH in the ACA was based on the notion that as more Americans gain insurance coverage, there will be less need for DSH funds distributed not only based on Medicaid utilization but also on a hospital’s care for the uninsured. Under the ACA, the premise is that for adult hospitals, with traditionally very low Medicaid utilization but higher levels of uninsured patients, DSH funding will be less necessary. This is not the case at CHKD nor at other freestanding children’s hospitals and safety net providers. The reason? At CHKD, 55% of our inpatient care is covered by Medicaid while less than 1% of care is delivered to children without insurance. Children who come to CHKD without insurance are provided with assistance in enrolling in available insurance programs, most notably Medicaid. We are proud of our great success in helping families obtain this needed coverage. The ensuing challenge for CHKD, however, is that Medicaid pays significantly less than the cost of providing care. DSH has historically helped to bridge that gap. Thus, we must work to direct these essential DSH funds to true safety net providers like CHKD.

Tackling this issue has been a top priority of ours from the day we learned that the ACA included this provision. Some of you may know that we have taken our concerns to Washington and to Richmond repeatedly since passage of the law. With today’s ruling, we believe that our legislators at the state and federal levels as well as regulators at the Centers for Medicare and Medicaid Services will have the framework from which to develop a plan to protect safety net hospitals like CHKD from this unintended consequence of the ACA.