Hospitals Put Pressure on Congress Over Expiring Pay Adjustments

Hospitals lobbyists have begun zeroing in on several financial aid initiatives and regulatory waivers this month as lawmakers race to fund the government for the next fiscal year.

Congress must pass either all 12 appropriations bills or a stopgap continuing resolution before October 1, with measures like the Department of Health and Human Services’ budget carrying significant healthcare consequences.

In addition, hospitals associations noted in recent letters and policy papers that they want other expiring programs — set to lapse at the end of September or December — be included in broader funding legislation.

At the top of the list are the Low-Volume Adjustment (LVA) and Medicare-Dependent Hospital (MDH) programs, which deliver extra reimbursement to rural facilities and others that treat smaller patient populations. Both initiatives are set to expire on September 30 and have repeatedly been granted short-term extensions by Congress, most recently in March. As in past years, hospitals are pressing Congress for a permanent fix or a multi-year renewal to avoid ongoing financial uncertainty.

Another concern is the Medicaid Disproportionate Share Hospital (DSH) program, which faces an $8 billion cut beginning October 1, with another $8 billion in reductions planned for each of the following two fiscal years. The initiative provides supplemental funding to more than 2,500 hospitals to cover the shortfall between Medicaid reimbursements and the cost of caring for beneficiaries and uninsured patients.

Although similar delays have been granted in prior congressional cycles, the American Hospital Association (AHA) argued in a July fact sheet that the reductions mandated under the Affordable Care Act are misguided, since the anticipated coverage gains never fully occurred.

In a September 5 joint letter to congressional leadership, several hospitals groups and other provider-aligned organizations likewise warned that moving forward with the scheduled cuts will intensify financial pressures as state-directed payment caps under the One Big Beautiful Bill Act take hold and uninsurance rates are projected to climb.

Charlene MacDonald, EVP of public affairs at the Federation of American Hospitals (FAH), which represents for-profit health systems, urged congressional leaders in a letter last week to work across party lines to block or postpone the Medicaid Disproportionate Share Hospital (DSH) payment reductions scheduled for year’s end, noting that the program already faces nearly $1 trillion in cuts.

Other policy deadlines at the end of the month don’t involve direct provider reimbursement but instead affect how care can be delivered beyond hospital walls.

Initially adopted during the pandemic and later continued amid budget standoffs, Congress suspended geographic restrictions and broadened originating sites for Medicare telehealth, while also enlarging the list of practitioners and organizations permitted to provide those services, among other temporary measures.

Importantly, these flexibilities have enabled hospitals to treat patients with acute needs in their homes through hospital-at-home programs. By July 2025, 400 hospitals from 142 health systems had obtained waivers to operate such models.

While hospitals would ideally like Congress to put these waivers into law, they argue that renewing the telehealth and hospital-at-home authorities before the September 30 deadline is still critical to preserving the documented advantages of these care models.

For many rural and safety-net hospitals, the expiring LVA and MDH adjustments represent more than just line items—they are lifelines. Without those payments, some hospitals could face sharp revenue drops, potentially forcing cutbacks or closure. In areas where insurance coverage is lower and patient volumes fluctuate seasonally, the risk is especially high.

Hospitals are urging Congress to either make these expiring payment adjustments permanent or extend them multi-year to give certainty. They are also pushing for additional oversight and flexibility in how state-directed payment caps will be implemented, to ensure that vulnerable hospitals aren’t disproportionately harmed.