Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. Results

09/01/2002

Matching to Medicare Provider Numbers. We were unable to identify the individual hospitals receiving 12.7% of the Medicaid DSH payments. These Medicaid funds with unidentified distribution consist of the two parts:

  • payments to specific hospitals for which we know some characteristics, but do not know the provider number (1.8% of the Medicaid total), and
  • aggregate payments by states, for which we were not able to identify the distribution among specific hospitals (10.9% of the Medicaid total).

Throughout this report, we refer to specific hospitals with known provider numbers, and to corresponding payments, as "identified" facilities (payments). The rest of the Medicaid DSH payments (12.7%) are referred to as "unidentified". When we combine identified facilities with individual hospitals with unknown provider numbers, we call them together "specific" facilities (payments). Finally, we call state amounts for which we could not identify individual recipients "payments with unknown distribution".

New Funds for Hospitals from the Medicaid DSH Program. Nationally, we found that the States reported $15 billion in DSH payments to hospitals. Utilizing the estimates made by Coughlin et al. for FY 1997, we estimate that the funds retained by the 11 states represented 15% of federal DSH payments. Table 4.2 compares the net gains by facilities from the Medicaid DSH program across the four different assumptions regarding the extent to which the DSH payments represent "new money" to the hospitals.

  • Column E shows the amounts hospitals would have received under an assumption that all DSH funds are new funds to the hospitals. The states with the largest DSH programs are California, New York, New Jersey, and Texas.
  • Column F shows the amounts hospitals would have received under an assumption that only the federal share of DSH payments represents new money to facilities. It was determined by applying the federal matching rate (Column C) to the DSH payments to individual hospitals as reported by the state.7 Overall, the federal matching rate was 56.6 percent but ranged from a high of 77.1 percent in Mississippi to the 50 percent floor in eight states. A relatively higher percentage of DSH payments are assumed to be new funds in the states with relatively high federal matching rates. We use these results in our analyses examining the joint distribution of Medicare and Medicaid DSH funds
  • Column G takes into account that some states may retain residual funds for their own use and assumes that only the portion of the federal share that was actually paid to hospitals represents new money. It reduces the estimate of new DSH funds in 11 states: California, Connecticut, Georgia, Indiana, Kentucky, Massachusetts, Mississippi, Missouri, North Carolina, Rhode Island, and Texas.
  • Column H assumes that the federal share of DSH payments to non-state hospitals, less a pro-rata portion of the residual funds retained by the states, is new DSH funds. It affects the estimate of new DSH funds in states that pay a high proportion of their DSH funds to state institutions. Relative to Column G, this assumption reduces the estimate of new DSH funds by more than 50 percent in 13 states, including three with more than $100 million in total DSH payments: Louisiana, Indiana, and Virginia.

 

Table 4.2 
Medicaid DSH Payment to Facilities Under Different Scenerios, FY1998 ($ millions)
  Net Medicaid Payments Received by Facilities: Four Scenarios
State % of Total Medicaid Days Federal Matching Percentage 97 Residual Funds % All Funds paid by State Federal Share of DSH Payments only Federal Share of DSH Payments To All Facilities Less Residual Funds Federal Share of Payments to Non-State Hospitals Only less Portion of Residual Funds
A B C D E F G H
Total 100.0% 56.6% 15.0% 15,029.890 8,320.511 7,119.399 4,662.346
Alabama 0.2% 69.3% - 393.726 272.931 272.931 164.145
Alaska 0.0% 59.8% - 13.776 8.238 8.238 0.000
Arizona 1.3% 65.3% - 122.347 79.929 79.929 79.427
Arkansas 0.5% 72.8% - 1.656 1.206 1.206 1.167
California 7.1% 51.2% 24.0% 2,448.159 1,085.000 825.000 779.678
Colorado 1.0% 52.0% 19.5% 174.804 90.846 73.143 73.119
Connecticut 1.6% 50.0% - 370.130 185.065 185.065 132.752
Delaware 0.0% 50.0% - 7.069 3.535 3.535 0.000
DC 1.1% 70.0% - 32.857 23.000 23.000 23.000
Florida 3.9% 55.6% - 370.754 206.325 206.325 136.882
Georgia 0.0% 60.8% 8.6% 413.330 251.470 229.902 229.902
Hawaii 0.0% 0.0% - 0.000 0.000 0.000 0.000
Idaho 0.4% 69.6% - 1.437 1.000 1.000 0.968
Illinois 2.7% 50.0% - 235.159 117.580 117.580 64.746
Indiana 0.8% 61.4% 7.9% 123.240 75.682 69.722 27.766
Iowa 0.5% 63.7% - 19.838 8.000 8.000 0.679
Kansas 0.6% 59.7% - 43.393 25.910 25.910 1.909
Kentucky 2.9% 70.4% 22.2% 194.685 137.000 106.527 77.622
Louisiana 1.4% 70.0% - 734.339 514.258 514.258 61.737
Maine 0.8% 66.0% - 124.484 82.210 82.210 53.024
Maryland 1.8% 50.0% - 143.284 71.642 71.642 13.506
Massachusetts 1.9% 50.0% 78.2% 548.501 274.250 59.681 42.186
Michigan 4.4% 53.6% - 319.963 171.436 171.436 88.513
Minnesota 0.0% 52.1% - 56.256 29.332 29.332 20.034
Mississippi 1.7% 77.1% 62.6% 182.572 140.744 52.632 30.350
Missouri 2.9% 60.7% 41.2% 666.057 404.163 237.805 159.416
Montana 0.4% 70.6% - 0.220 0.155 0.155 0.155
Nebraska 0.3% 61.2% - 5.922 3.623 3.623 2.527
Nevada 0.4% 50.0% - 73.560 36.780 36.780 36.780
New Hampshire 0.4% 50.0% - 128.411 64.206 64.206 51.706
New Jersey 29% 50.0% - 1,058.598 529.299 529.299 320.989
New Mexico 0.3% 726% - 6.886 5.000 5.000 1.197
New York 29.0% 50.0% - 1,868.267 934.133 934.133 599.117
North Carolina 4.8% 63.1% 6.6% 338.800 213.749 199.578 101.635
North Dakota 0.0% 70.4% - 1.195 0.842 0.842 0.145
Ohio 4.8% 58.1% - 657.035 382.000 382.000 317.896
Oklahoma 0.3% 70.5% - 22.692 16.000 16.000 1.131
Oregon 0.5% 61.5% - 28.235 17.353 17.353 5.076
Pennsylvania 0.1% 53.4% - 546.329 291.685 291.685 199.221
Rhode Island 1.0% 53.2% 29.2% 55.986 29.768 21.066 15.711
South Carolina 1.6% 70.2% - 438.857 308.210 308.210 197.328
South Dakota 0.6% 67.7% - 1.074 0.728 0.728 0.220
Tennessee 0.1% 0.0% - 0.000 0.000 0.000 0.000
Texas 4.9% 62.3% 41.7% 1,438.763 896.062 522.566 385.054
Utah 0.6% 72.6% - 3.847 2.792 2.792 0.882
Vermont 0.6% 62.2% - 29.072 18.000 18.000 12.403
Virginia 1.8% 51.5% - 160.678 70.000 70.000 10.457
Washington 2.3% 52.2% - 330.274 172.238 172238 96.282
West Virginia 1.8% 73.7% - 82.223 60.573 60.573 38.707
Wisconsin 0.8% 58.8% - 11.043 6.498 6.498 5.134
Wyoming 0.0% 63.0% - 0.106 0.067 0.067 0.067
1.In some cases these payments may go to hospitals outside that makes payments. 
2 Some of these payments may be received from states other than the one where the hospital is located. 
3 We assume that these payments go only to the hospitals within the state that makes payments (payments and receivables are the same for this category).

Medicaid DSH Distribution to Acute Care Facilities and IMDs by State. Table 4.3 shows the split of Medicaid DSH payments between acute care facilities and IMDs. The use of Medicaid DSH funds to support mental health care facilities is viewed as troubling by federal policymakers since Medicaid does not cover services in IMDs for the under age 65 population. IMDs received 23% of the total FY 1998 Medicaid DSH funds (Column E) compared to 1997, when it was equal to 21% (Coughlin, Ku and Kim, 2000). The number of states where payments to IMDs exceed 50% of the total Medicaid DSH funds also increased. In 1997, there were six such states (Florida, Illinois, Kansas, Maryland, Oregon, and South Dakota). In 1998, there were ten such states (Alaska, Delaware, Indiana, Kansas, Maryland, Michigan, North Dakota, Oregon, Pennsylvania, and South Dakota)8.

Table 4.3 Actual Medicald DSH Distribution to Community Hospitals and Instotutions for Mental Disease


7.  In some cases, we found that the sum of these federal shares in all payments made by the state exceeds state federal allotment. We considered scaling down all individual payments proportionately so that the sum is equal to the federal allotment. The assumption behind this would be that the federal matching funds never exceed the maximum limit on such payments established for all states by the federal government. However, we found that the reported amounts were consistent with the HCFA-64. We decided to rely on the HCFA-64 and make no adjustments to the reported amounts.

8.  Michigan and Pennsylvania did not take part in the survey conducted by Coughlin, Ku and Kim (2000), so we do not have data on their share of IMD payments in 1997.

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