Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. Joint Distribution of Federal DSH Funds

09/01/2002

State-reported information on 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. Our exploratory analyses of alternative allocation policies are within the context of using a single federal DSH funding mechanism. By assuming there would be a new funding stream to support financially vulnerable safety net hospitals, there is no need to link the funds to services provided to Medicare and Medicaid beneficiaries and there is greater flexibility to address the identified shortcomings of the current system. In the next chapter, we discuss potential criteria that could be used to identify hospitals that would be eligible to receive DSH funds and potential bases for determining how to distribute the funds to those hospitals through a separate funding mechanism.

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