All Eyes on DSH Payment Cuts: The Future of DSH Payments in Healthcare Reform

Published by Becker’s Hospital Review

Healthcare reform, with its potential to reduce levels of uncompensated care, may seem like a way for hospitals to increase their bottom lines. However, the Patient Protection and Affordable Care Act (PPACA) decreases Medicare and Medicaid Disproportionate Share Hospital (DSH) payments — adjustments made to hospitals that serve a higher-than-average number of low-income patients. That, coupled with customary CMS cuts, could further erode revenue for facilities in states with their own support funding for uninsured patients.

History of DSH payments

For almost 25 years, the Medicare/Medicaid program has classified hospitals that treat large numbers of low-income patients as DSH program facilities and, as such, offered higher payments for treatment. The government determines whether a hospital qualifies for DSH payments using a series of formulas that consider the ratio of Medicaid patient days to total patient days, and the ratio of patient days for Medicare beneficiaries receiving Supplemental Security Income to total Medicare patient days.[1]

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