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Medicaid DSH final rule

July 26, 2013

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The Centers for Medicare & Medicaid Services (CMS) Sept. 13 issued a final rule on the methodology it will use to reduce federal Medicaid Disproportionate Share Hospital (DSH) allotments to states by an $500 million in fiscal year (FY) 2014 and $600 million in FY 2015, the amounts mandated by the “Patient Protection and Affordable Care Act.”

The final rule establishes separate DSH reduction pools for “low-DSH” states and other states, and creates a formula for distributing the reductions in each pool based on factors outlined in the law. The formula, which applies only for FYs 2014 and 2015, gives one-third weight to the uninsured percentage factor and one-third weight to each of two DSH payment targeting factors.

Medicaid DSH payments are meant to help hospitals that treat large numbers of lowincome patients and provide high levels of uncompensated care.

“The final rule is substantively the same as the method in the proposed rule, but includes some technical updates, corrections and clarifications after reviewing the public comments,” CMS said in releasing the rule. The agency plans to revisit the way it calculates Medicaid DSH payments and issue new rules in 2016 and beyond. For more on the final rule, click on:
http://tinyurl.com/mb4fw4x.

The AHA is pushing Congress to delay the DSH cuts. As it noted in its July comments to CMS on the proposed DSH rule, the AHA strongly supports the “DSH Reduction Relief Act,” H.R. 1920, which would delay for two years cuts to the Medicare and Medicaid DSH programs.