In our simulations of alternative DSH policies in Chapter 7, we use a combined estimate of Medicare and Medicaid DSH payments:
- The Medicare estimate is based on the amount of Medicare DSH payments that hospitals would have received in FY1998 if the BBRA and BIPA changes in the eligibility and payment formula had been in effect. The temporary across-the board reductions are not reflected in the baseline.
- The Medicaid estimate is based on the federal share of Medicaid DSH payments.
The results of combining the current law Medicare payments with the federal share of Medicaid payments for all the hospitals in our database are in Appendix B. (The actual baseline for a given simulation is determined by the hospitals that are included in that simulation). Limiting the Medicaid DSH payments to the federal share increases the Medicare share of total DSH funds to identifiable hospitals from 26 % in the preceding tables to 38 % (Table B.2). As a result, Medicare payment distributions have greater influence on the distribution of the combined new DSH funds. In addition, the Medicaid distribution is affected by the FMAP percentages. The proportion of DSH funds received by hospitals in states with a high FMAP increases relative to those with a low FMAP (Table B.3).