Medicare DSH

Medicare Disproportionate Share Payments (better known as DSH) are a critical component of overall Medicare inpatient payments, and help offset the costs of care hospitals incur treating indigent patients.  The Affordable Care Act imposed substantial reductions in DSH payments over time, under the assumption that as ACA achieves its goal of increasing the number of Americans with health care coverage, hospitals would experience a corresponding decrease in their uncompensated care costs.  In addition, ACA fundamentally changed the way hospital DSH payments are defined and determined. 

In FY14, CMS began implementing the DSH cuts and payment reforms mandated by Congress. FAH appreciates CMS’s past engagement of the hospital industry, particularly in 2013, with regard to the calculation methodology that Congress has required to determine uncompensated care payments to disproportionate share hospitals under Section 3133 of the ACA.  And we are particularly pleased with recent clarifications and improvements announced by CMS to the instructions for hospital cost report Worksheet S-10, the data from which CMS will increasingly rely on in allocating DSH payments.  Going forward, the S-10 will now specifically allow for hospitals to report discounts provided to uninsured patients as part of a hospital’s total uncompensated care costs, a policy FAH has advocated and which is clearly consistent with and called for under Section 3133.   In addition, CMS needs to audit S-10 data among other reforms to further ensure that the form yields fair, accurate, and uniform data used to distribute DSH funds.