Federal Medicaid Disproportionate Share Hospital Allotment Reduction Method Finalized

Posted on September 26, 2019

The Centers for Medicare & Medicaid Services (CMS) published a final rule Sept. 25 that outlines the method to determine federal Affordable Care Act-related Medicaid disproportionate share hospital (DSH) allotment reductions for fiscal years (FYs) 2020 through 2025. Five factors will be used to calculate each state’s DSH allotment reduction, including uninsured percentage factor, high volume of Medicaid inpatients factor, high level of uncompensated care factor, low DSH adjustment factor, and budget neutrality factor. The FY 2020 national DSH allotment reduction will be $4 billion and will grow to $8 billion per year beginning in FY 2021.

The CMS issued a final rule to implement the federal DSH allotment reductions in 2013; however, Congress delayed them to FY 2020. The new rule updates the original method by incorporating new and updated data sources. It is unclear how this will affect the Regular and Outpatient Uncompensated Care DSH Pools. The MHA will continue to monitor this issue and its impact on Michigan’s Medicaid DSH program and will provide additional information as it becomes available. Members with questions should contact Jason Jorkasky at the MHA.

Tags: DSH, Medicaid

Posted in: Member News

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