Gillibrand Leads Bipartisan Bill To Avert Funding Cuts To Hospitals That Serve Low-Income Patients

Gillibrand Leads Bipartisan Bill To Avert Funding Cuts To Hospitals That Serve Low-Income Patients

Sep 10, 2025

Legislation would prevent further Medicaid cuts to New York hospitals of nearly $300 million annually

Washington, D.C. - Today, U.S. Senator Kirsten Gillibrand (D-NY) and U.S. Senator Jim Banks (R-IN) introduced the bipartisan Save Our Safety Net Hospitals Act to prevent massive cuts to hospitals that serve large percentages of low-income patients. The bill would readjust the calculation that determines how Medicaid Disproportionate Share Hospital (DSH) funding is allocated, ensuring that hospitals in rural and low-income communities get the funding they need to provide care.

The text of this legislation was included in the bipartisan health extenders package introduced in December 2024 that ultimately was dropped from the final government funding bill. This no-cost,commonsense legislation reflects a strong bipartisan, bicameral commitment to addressing an unintended impact of a provision included in the Consolidated Appropriations Act of 2021.

"Safety net hospitals provide critical care to New York's most vulnerable communities, and we must ensure that these establishments get the funding they need," said Senator Gillibrand. "This legislation will provide a commonsense fix that will help our state's hospitals give patients the care they deserve-regardless of income. I'm proud to introduce this bipartisan, bicameral bill and will fight to get this commonsense policy change across the finish line this fall before further cuts go into effect."

Medicaid DSH funding helps preserve access to care at hospitals and health systems that serve the nation's most vulnerable patients. All hospitals in New York State receive a certain level of DSH funding to help cover the shortfall of costs, and hospitals that serve large percentages of low-income patients rely on it to keep their doors open. DSH caps determine the maximum amount of federal Medicaid DSH funding that a hospital can receive.

DSH funding caps have historically been based on the financial losses from services provided to: (1) uninsured patients; (2) Medicaid enrollees; and (3) dual eligible-enrollees, which are Medicaid patients that also use Medicare or other third-party coverage to supplement their insurance. However, Section 203 of the Consolidated Appropriations Act of 2021 enacted a significant change in how the DSH caps for specific hospitals are calculated. It removed Medicaid patients with third-party coverage from the DSH cap calculation unless the hospital meets extremely narrow exemption criteria, impacting hospitals in rural and high-poverty areas where a significant number of residents covered by Medicaid are dually eligible for Medicare and depend on it for additional coverage.

By restoring the Medicaid DSH payment formula that existed before Fiscal Year 2022 and allowing states to amend their plans to implement these changes, the Save Our Safety Net Hospitals Act would preserve the level of Medicaid DSH funding available to hospitals that serve a large number of low-income dual-eligible patients.

In New York, this funding boost would benefit the hospitals who need it most, as 85% of the state's Medicaid DSH spending is directed to public hospitals and others defined as "financially distressed."

The Save Our Safety Net Hospitals Act would:

1. Restore the Medicaid DSH payment formula that existed before Fiscal Year 2022, allowing states to compute DSH payments including low-income dual-eligible patients
2. Allow states to spend unspent DSH payments from earlier years
3. Permit states to amend their Medicaid plans to implement these changes

Representatives Nick LaLota (R-NY) and Yvette Clarke (D-NY) lead companion legislation in the U.S. House of Representatives.

"Hospitals like Methodist, Schneck, and Reid are struggling because of an unfair federal formula," said Senator Jim Banks. "This bill fixes that, and helps Indiana hospitals get their fair share of funding."

"The bipartisan, bicameral Save-Our-Safety-Net Hospitals Act, which I'm proud to co-lead with Senator Gillibrand, protects the very institutions that are the backbone of our healthcare system," said Rep. Nick LaLota. "Safety-net hospitals like Stony Brook University Hospital in New York provide essential care to our most vulnerable communities. This commonsense legislation safeguards Medicaid DSH payments, ensuring these hospitals can continue delivering the critical services patients rely on. I'm proud to reintroduce the companion bill in the House to strengthen access to care for those who need it most."

"Across our state, millions of New Yorkers rely on safety net hospitals to reach the healthcare services and support they need to live the lives they deserve. Any potential cuts that would threaten the ability of these hospitals to serve our communities are not only unthinkable and unacceptable, but they demand Congress' swift action to prevent them. I am proud to support the bipartisan SOS Hospitals Act to keep the doors of our vital safety net hospitals open and ensure our most vulnerable neighbors never lose their access to necessary care," said Congresswoman Yvette D. Clarke.

The legislation is endorsed by Healthcare Association of New York State (HANYS), Greater New York Hospital Association (GNYHA), Suburban Hospital Alliance of New York State, America's Essential Hospitals, and the Alliance of Safety-Net Hospitals.

"The Healthcare Association of New York State applauds Senators Kirsten Gillibrand (D-NY) and Jim Banks (R-IN) for their steadfast leadership in introducing the Save our Safety-Net Hospitals Act," said HANYS President Bea Grause, RN, JD. "This bill will preserve critical Disproportionate Share Hospital funds for hospitals that treat our most vulnerable populations. It's an important step toward financially stabilizing hospitals delivering healthcare in underserved communities across New York and the nation. HANYS is pleased to support this essential bipartisan, bicameral legislation and we urge its swift passage."

"Medicaid DSH payments are an essential lifeline for New York's safety net hospitals, but the current DSH cap calculation will severely harm them financially and disrupt access to care," said Kenneth E. Raske, President of the Greater New York Hospital Association. "The Save Our Safety Net Hospitals Act will help ensure that safety net hospitals can continue to serve the most vulnerable patients and communities. The entire hospital community strongly supports this bill and thanks Senators Gillibrand and Banks for their advocacy and leadership."

"Four years ago, a minor change in statute resulted in a sharp cut to the Medicaid DSH funding that public hospitals - including Nassau University Medical Center, Stony Brook University Hospital and Westchester Medical Center - receive. This funding is essential to offsetting the cost of caring for a disproportionate share of uninsured and Medicaid patients. These cuts cannot be sustained, certainly not on top of the $1 trillion in new Medicaid cuts about to be implemented. On behalf of safety net hospitals on Long Island and in the Hudson Valley, I applaud Senator Gillibrand for her leadership on this bill, which would correct a serious threat to the stability of safety net hospitals," said Wendy Darwell, CEO of the Suburban Hospital Alliance of New York State.

"We thank Senators Gillibrand and Banks for their bipartisan leadership in introducing this important legislation and urge all members of Congress to support it," said Bruce Sigel, MD, MPH, President and CEO of America's Essential Hospitals. "Preserving Medicaid disproportionate share hospital (DSH) funding is critical for the future of the safety net and the essential hospitals who serve our nation's communities."

"On behalf of Stony Brook University Hospital, we thank Senators Gillibrand and Banks as well as Congressman LaLota for their tremendous leadership in reforming the catastrophic Sec. 203 Medicaid DSH formula. If implemented as written in current statute, Sec. 203 would cost Stony Brook University Hospital $53 million in reduced revenue this year and each year thereafter," said Carol Gomes, Stony Brook University Hospital CEO and COO. "I am thankful for the Senate and House partnership on this matter, and hope that the Senators, Representatives, and their colleagues will be able to get this bill across the finish line this year to prevent safety net hospitals like Stony Brook from having to make tough decisions just to keep our doors open. Being forced to make these decisions would impede our ability to provide care to the community and negatively impact our contributions to the local economy."

"America's Essential Hospitals strongly supports passage of the Save our Safety Net Hospitals Act, which would help strengthen and sustain essential hospitals and the communities they serve," said Board Chair and Erie County Medical Center CEO, Tom Quatroche. "The bill would fix an unintended consequence of previous legislation that's hurting hospitals that serve a large pool of dual-eligible patients. These hospitals rely on Medicaid DSH funding for support but have seen that support gutted."

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