Brief Is It Time To Reform Medicaid and Medicare Supplemental Payments?
Teresa A. Coughlin, John Holahan
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Medicare and Medicaid now make over $80 billion in supplemental payments to acute care providers. These are intended to help providers, primarily hospitals, with expenses not covered by normal reimbursement rates, either because of low payment rates by Medicaid or the cost of care provided to the uninsured. Medicaid supplemental payments accounted for $71.7 billion and Medicare for $10.7 billion in 2020. Unfortunately, these payments have a long and problematic history. For example, often states are not paying their full share, resulting in an overstatement of Medicaid spending. Moreover, the distribution of payments both across and within the states is highly inequitable. The report concludes that it would be better to use most of the existing supplemental payments to expand health insurance coverage to the uninsured or at least target existing supplemental payments in a more equitable way, prioritizing hospitals in need across the country.

Research Areas Health and health care State and local finance
Policy Centers Health Policy Center
Research Methods Quantitative data analysis