Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. Areas for Additional Research

09/01/2002

Absent a national database with uncompensated care data and other information needed to develop measures of financial risk, three areas of investigation could be pursued that would provide valuable information related to federal support for hospitals that provide a disproportionate share of care to poor patients.

  • Update the analysis of the current distribution of DSH payments.
  • Update and expand the in-depth state analyses to include additional states that require hospitals to report uncompensated care information.
  • Examine market-level issues related to DSH funding. The questions that could be examined include:
    • How is the low-income patient burden shared by the hospitals within a market area and does it vary by type of payer and type of service?
    • How do communities whose hospitals share the uncompensated care burden fare under current DSH distribution policies relative to those communities where the uncompensated care burden is concentrated.
    • How does availability of community safety-net hospitals affect the low-income outpatient care furnished by hospitals? What is the relationship between Medicaid payment rates and the site where ambulatory care is provided to low-income patients?
    • What are the issues that would arise if federal support for low-income patient care were to take into account the proportion of a market's low-income or uncompensated care furnished by the hospitals in the market?
    • Investigate the characteristics of hospitals with large indigent care loads that incur substantial financial risk yet are financially viable. This would include looking at the impact of state and local indigent care programs and other subsidies such as Medicare's indirect teaching adjustment.

A national database is needed to fully understand the potential impact of alternative allocation policies at both the national and market levels. Having the national database would facilitate:

  • A multi-variate analysis of the factors affecting a hospital's financial risk and its overall financial status using a broader set of hospitals could help identify additional factors that should be considered in an allocation policy.
  • An evaluation of inter-state redistributions that would occur under alternative DSH financing policies, including the types of policies examined in this paper as well as additional ones that would take into account a state's ability to finance indigent care and/or market-level factors.

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