Analysis of the Joint Distribution of Disproportionate Share Hospital Payments

The Medicare and Medicaid programs distribute extra payments to hospitals that treat a disproportionate share of indigent patients. The disproportionate share hospital (DSH) payment policies differ substantially between the two programs and, under Medicaid, across states as well. State-reported information on Medicaid DSH payments to individual hospitals permits for the first time a national examination of the joint distribution of Medicare and Medicaid funds and how well the funds are targeted toward vulnerable safety net hospitals. This report provides the results of our analyses to: 1) examine the distribution of both Medicare and Medicaid DSH funds across hospitals, 2) assess alternative criteria that could be used to identify safety net hospitals, 3) develop measures of hospital financial vulnerability to identify those safety hospitals that are under most financial pressure, and 4) explore the extent to which alternative allocation policies to the current Medicare and Medicaid DSH payment mechanisms would improve the distribution of funds to those safety net hospitals that are most vulnerable. [170 PDF pages]