Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. Data Issues and Limitations


Examining the relationship between the financial status of hospitals and the distribution of DSH payments was a complex task. Particular areas where data issues became potentially problematic included:

  • Matching hospitals across multiple data sources: Medicare cost reports, state DSH reports, AHA survey data, HCUP, and (in the case of California, New York and Wisconsin) state financial reports. The inclusion of Medicare provider numbers on the state DSH reports would facilitate matching hospitals with their DSH payments. Universal adoption of the uniform provider number would also help.
  • For Medicaid DSH, the net gains to the hospital are more important than the reported DSH payments. CMS should give consideration to obtaining this information. It could be included in the state reports on DSH payments (in which case the information would be available for all hospitals) or it could be required as part of the Medicare cost report. In any event, knowing the DSH payments to individual hospitals is not enough; it is also important to know how those payments (and any provider contributions) are handled in reporting Medicaid contractual allowances and patient revenues.
  • The differences in state accounting and reporting practices made it difficult to determine Medicaid shortfalls and to take "new" DSH payments into account. The financial data for several public hospitals was problematic. It is important to understand how financing occurs for county-owned hospitals in terms of other intergovernmental transfers and deficit funding. An allocation based on financial measures would require uniform reporting by payer. All three states in this analysis require the type of financial information that would be needed.
  • Consistent handling of Medicaid managed care. Although all three states collect fiscal information on Medicaid managed care enrollees, reporting is sufficiently problematic that the California and New York Medicaid managed care data were combined with "other payers" instead of the Medicaid program. As a result, the care provided to Medicaid patients is likely to be understated- even when, as in the case of Wisconsin, Medicaid managed care revenues are separately reported on the public use file.

The "snapshot" approach of looking at one year's data may not be sufficient for an adequate understanding of the financial implications of serving low-income patients. In California, the FY1998 payments included payments from the state's fiscal year 1997 and thus overstated the average DSH payments. The New York indigent care pool was in transition during FY1998 and additional changes were enacted in 2000. Wisconsin's uncompensated care costs have increased 60 percent since 1997. Only the first-year impacts of the Balanced Budget Amendment are reflected in the FY1998 data. These considerations suggest that a multi-year study- perhaps with periodic updating- would be appropriate.

Even more troubling than using one year's data is the lack of a national database that provides uniform information on the quantity of care provided to low-income patients and the financial risk associated with that care. The BBRA provision requiring the Secretary to collect through the Medicare cost report data on uncompensated costs should help. This provision is effective for cost reporting periods beginning on or after October 1, 2001. A national database is needed to understand the potential re-distributions that might occur both at the market level and across states under a national allocation policy.

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