CMS Issues Final Rule for Medicaid DSH Payments

April 2017 ~

CMS issued a final rule, on March 30, to clarify the existing policy regarding how hospital Disproportionate Share Hospital (DSH) payments are calculated.

Currently, federal law requires state Medicaid programs to make DSH payments to hospitals that serve large Medicaid and uninsured populations. Under the hospital-specific DSH limit, federal financial participation is limited to a hospital’s uncompensated care costs.

Under the final rule, effective June 2, uncompensated care costs include only those costs for Medicaid-eligible individuals that remain after accounting for payments made to hospitals by or on behalf of Medicaid-eligible individuals, including Medicare and other third-party payments. “As a result, the hospital-specific limit calculation will reflect only the costs for Medicaid eligible individuals for which the hospital has not received payment from any source,” as stated in the final rule.

CMS does not anticipate that the rule will have a significant financial impact on states or providers since it does not represent a change in policy.


Source(s): CMS; Modern Healthcare; AHA; Becker’s Hospital CFO; Advisory Board; Lexology;