The Centers for Medicare and Medicaid Services (CMS) has withdrawn a controversial policy, first introduced in 2010, which changes how much a Medicaid disproportionate share hospital (DSH) may receive annually in supplemental DSH payments. CMS took this action in response to several court rulings invalidating the agency's policy. Despite the agency's walk-back of its policy, hospitals should review their historical Medicaid DSH payments to ensure that they were calculated correctly.
Medicaid DSH payment caps
Congress established the Medicaid DSH program to help relieve the financial burden on hospitals that treat a disproportionate share of low-income Medicaid and uninsured patients. The Medicaid statute caps a hospital's annual DSH payments at the amount of the hospital's annual uncompensated care costs. The statute specifically defines uncompensated care costs as the total costs of providing treatment to Medicaid or uninsured patients minus the total Medicaid payments...
