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CMS Releases Proposed Rule for Medicaid DSH Payment Reductions

Wednesday, May 15, 2013

On May 13, 2013, the U.S. Center for Medicare and Medicaid Services (CMS) announced that a proposed rule has been published for Medicaid Disproportionate Share Hospital (DSH) Allotment Payment Reductions.  As part of the Affordable Care Act (ACA), the DSH reductions are scheduled to take effect October 1, 2013 for fiscal years 2014 and 2015.  DSH payments are made to offset the costs to hospitals for providing services to people without insurance.  The reduction in payments to states would reflect an overall reduction in uncompensated costs to hospitals as the ACA will expand health coverage options for the uninsured. 

Two major facets of the proposed rule include:

  • Requiring that the Secretary of Health and Human Services establish a formula to determine how states target the DSH payments
  • The amount of reduction in DSH payments would reflect a state's efforts toward expanding health coverage, such as a reduction in the number of uninsured people, reduction in overall DSH payments, and being able to demonstrate effective targeting of DSH payments to hospitals that serve high numbers of people without adequate health insurance

The proposed rule will be published in the Federal Register on May 15, 2013 and available for public comment.  Comments are due by July 12, 2013, and instructions on submitting comments are available through the Federal Register.

Read the CMS Fact Sheet on the Proposed Rule.

Read the full text of the Proposed Rule.

Visit TAC's Health Reform resource page.