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

09/01/2002

Wisconsin's small Medicaid DSH program benefited 10 Wisconsin general acute care hospitals in FY1998 with one hospital receiving over 80 percent of the funds going to acute care hospitals. The remainder of the funds went to IMDs, children's and other hospitals and two out-of-state hospitals. Medicaid contributed only 17 percent of the total $39.7 million in the FY1998 DSH funds paid to the acute care hospitals (Table 8.10).

Table 8.10 
Wisconsin DSH Payments For FY 1998
  All Hospitals
(millions $)
Hospitals in Analysis file
(millions $)
Medicaid DSH Payments1    
  N hospitals receiving payments 16 10
  Total FY1998 Payments 11.2 6.7
  Net FY1998 Medicaid "New" DSH 11.2 6.7
Federal Share of Medicaid DSH Payments 6.6 3.9
Medicare DSH Payments    
  N hospitals receiving payments N/A 52
  Current law payments   33.1
Total DSH Payments for Simulation N/A 36.9

1. Source: Wisconsin report to CMS on FY1998 DSH expenditures.


The Medicare program paid DSH to 52 hospitals and accounted for 83% of the funds ($33.1 million) (Table 8.11). Taken together, 54 acute care hospitals in our analysis file received DSH payments under current policies. The financial risk associated with serving low-income patients across Wisconsin hospitals is relatively low ($78 per adjusted day) and is shared across all hospitals so that three hospitals bore financial risk that was more than 10 percent of their operating costs. Only 19 Wisconsin hospitals qualify as safety net hospitals using the definition of 20 percent or more of inpatient days attributable to Medicare SSI, Medicaid, local indigent care programs, self-pay and charity care.

Table 8.11 
WI Hospital Financial and Utilization Data for Reporting Periods Ending in 1998
  N of
Hospitals
Adjusted
Inp Days
%
Adj. Inp
Days
Financial
Risk
$
% of
Fin Risk
Fin Risk
per Adj
Day ($)
Margin
Net of
DSH
All Hospitals 113 5,165,466 100% 402,965,177 100% 78 5.8%
By Geographic Area              
Urban 52 3,033,000 59% 324,020,668 80% 107 5.5%
Large Urban 23 1,287,685 25% 158,653,582 39% 123 3.4%
Other Urban 29 1,745,315 34% 165,367,085 41% 95 7.0%
Rural 61 2,132,466 41% 78,944,510 20% 37 6.8%
Urban By Bedsize              
0-49 beds 6 139,083 3% 3,399,099 1% 24 6.2%
50-99 beds 8 209,190 4% 11,930,599 3% 57 7.1%
100-199 beds 10 305,502 6% 19,083,931 5% 62 8.4%
200-299 beds 8 571,377 11% 61,711,929 15% 108 4.8%
300-499 beds 15 1,089,365 21% 101,451,220 25% 93 6.5%
500 or more beds 5 718,483 14% 126,443,889 31% 176 3.1%
Rural By Bedsize              
0-49 beds 32 1,014,982 20% 19,641,009 5% 19 3.2%
50-99 beds 20 610,746 12% 27,456,984 7% 45 6.5%
100-149 beds 5 229,434 4% 9,876,735 2% 43 8.5%
150 or more beds 4            
Type of Ownership
State government 1 184,242 4% 21,564,543 5% 117 3.8%
County or local government 5 98,222 2% 4,695,152 1% 48 9.5%
Gov. - hosp. dist. 0 - - - - - -
Not-for-profit 107 4,883,002 95% 376,705,482 93% 77 5.8%
For-profit 0 - - - - - -
Teaching Status
Non- teaching 90 3,093,999 60% 138,254,019 34% 45 6.1%
Fewer than 10 residents 9 534,118 10% 49,357,043 12% 92 9.7%
Residents >10 and <100 11 1,077,726 21% 107,752,477 27% 100 5.7%
Residents => 100 and < 250 2 275,381 5% 86,037,095 21% 312 -0.2%
Residents => 250 1 184,242 4% 21,564,543 5% 117 3.8%
Low-Income Patient Gross Days as % of Total Days
More than 60% 1 17,403 0% 2,627,553 1% 151 -1.3%
50-60 % 0 - - - - - -
40-50 % 1 35,408 1% 1,503,079 0% 42 1.0%
30-40 % 6 485,170 9% 97,355,604 24% 201 -0.4%
20-30 % 11 431,728 8% 33,402,785 8% 77 0.3%
10-20 % 60 2,817,231 55% 191,680,129 48% 68 6.3%
10 % and less 34 1,378,526 27% 76,396,028 19% 55 8.0%
Low-Income Patient Gross Revenues as % of Total Patient Revenues
More than 60% 0 - - - - - -
50-60 % 0 - - - - - -
40-50 % 2 112,702.00 2% 55,780,513 14% 495 -8.4%
30-40 % 1 71,566.00 1% 7,046,785 2% 98 -6.1%
20-30 % 3 254,394.00 5% 33,718,409 8% 133 4.1%
10-20 % 32 1,369,452.00 27% 94,028,253 23% 69 2.0%
10 % and less 75 3,357,352.00 65% 212,391,219 53% 63 7.8%
Financial Risk
More than 25 % 0 - - - - - -
20-25 % 0 - - - - - -
15-20 % 1 95,299.00 2% 53,152,960 13% 558 -9.0%
10-15 % 3 149,507.00 3% 10,505,009 3% 70 -4.7%
5-10 % 42 1,866,327.00 36% 173,827,268 43% 93 5.2%
0-5 % 67 3,054,333.00 59% 165,479,942 41% 54 7.1%
None 0 - - - - - -
Safety Net Hospitals:Margin Net of DSH
Less than -25% 0 - - - - - -
-15 to -25% 0 - - - - - -
-5% to -15% 2 166,865.00 3% 60,199,744 15% 361 -8.4%
-5% to 5% 11 627,630.00 12% 67,098,264 17% 107 1.4%
5% to 15% 6 175,214.00 3% 7,591,013 2% 43 8.8%
From 15% to25% 0 - - - - - -
25% and higher 0 - - - - - -
All Safety Net Hospitals 19 969,709.00 19% 134,889,021 33% 139 -0.1%

 

Table 8.11 (con't)
WI Hospitals for Reporting Periods Ending in 1998
Medicare Current Law and Medicaid "New" DSH Funds
  N Receiving DSH Joint DSH Funds $ % of DSH New Funds DSH To Fin Risk Margin w/ Medicare DSH Margin w/ Medicaid DSH Margin w/ Joint DSH
All Hospitals 54 39,721,492 100% 0.10 6.3% 5.9% 6.4%
By Geographic Area              
Urban 38 37,470,610 94% 0.12 6.1% 5.6% 6.3%
Large Urban 16 29,794,272 75% 0.19 4.6% 3.7% 5.0%
Other Urban 22 7,676,339 19% 0.05 7.3% 7.0% 7.3%
Rural 16 2,250,882 6% 0.03 7.0% 6.8% 7.0%
Urban By Bedsize              
0-49 beds 0 0 0% 0.00 6.2% 6.2% 6.2%
50-99 beds 3 221,718 1% 0.02 7.1% 7.1% 7.1%
100-199 beds 7 1,428,581 4% 0.07 8.7% 8.4% 8.7%
200-299 beds 8 2,817,531 7% 0.05 5.1% 4.8% 5.1%
300-499 beds 15 5,189,832 13% 0.05 6.8% 6.5% 6.8%
500 or more beds 5 27,812,948 70% 0.22 5.0% 3.6% 5.5%
Rural By Bedsize              
0-49 beds 7 587,856 1% 0.03 3.4% 3.2% 3.4%
50-99 beds 6 996,141 3% 0.04 6.7% 6.5% 6.7%
100-149 beds 2 659,384 2% 0.07 8.9% 8.6% 8.9%
150 or more beds              
Type of Ownership
State government 1 2,184,504 5% 0.10 4.4% 3.8% 4.4%
County or local government 1 5,149 0% 0.00 9.5% 9.5% 9.5%
Gov. - hosp. dist. 0 0          
Not-for-profit 52 37,531,839 94% 0.10 6.4% 5.9% 6.5%
For-profit 0 0 - - - - -
Teaching Status
Non- teaching 32 3,792,027 10% 0.03 6.3% 6.1% 6.3%
Fewer than 10 residents 9 2,340,355 6% 0.05 9.9% 9.7% 10.0%
Residents >10 and <100 10 7,784,573 20% 0.07 6.1% 5.7% 6.1%
Residents => 100 and < 250 2 23,620,033 59% 0.27 3.3% 1.0% 4.5%
Residents => 250 1 2,184,504 5% 0.10 4.4% 3.8% 4.4%
Low-Income Patient Gross Days as % of Total Days
More than 60% 1 283,323 1% 0.11 -0.4% -0.1% 0.8%
50-60 % 0 0 - - - - -
40-50 % 0 0 0% 0.00 1.0% 1.0% 1.0%
30-40 % 6 25,422,108 64% 0.26 2.9% 0.7% 3.9%
20-30 % 9 4,899,009 12% 0.15 1.8% 0.3% 1.8%
10-20 % 25 8,856,452 22% 0.05 6.6% 6.3% 6.6%
10 % and less 13 260,600 1% 0.00 8.0% 8.0% 8.0%
Low-Income Patient Gross Revenues as % of Total Patient Revenues
More than 60% 0 - - - - - -
50-60 % 0 - - - - - -
40-50 % 2 11,003,071 28% 0.20 -2.7% -7.8% -2.2%
30-40 % 1 588,260 1% 0.08 -5.0% -5.6% -4.6%
20-30 % 1 12,900,285 32% 0.38 6.3% 5.7% 7.8%
10-20 % 21 9,763,578 25% 0.10 2.8% 2.0% 2.8%
10 % and less 29 5,466,298 14% 0.03 8.0% 7.8% 8.0%
Financial Risk
More than 25 % 0 - - - - - -
20-25 % 0 - - - - - -
15-20 % 1 10,719,748 27% 0.20 -2.9% -8.5% -2.4%
10-15 % 2 871,583 2% 0.08 -3.8% -4.1% -3.2%
5-10 % 26 22,414,802 56% 0.13 6.0% 5.4% 6.2%
0-5 % 25 5,715,359 14% 0.03 7.2% 7.1% 7.2%
None 0 - - - - - -
Safety Net Hospitals:Margin Net of DSH
Less than -25% 0 - - - - - -
-15 to -25% 0 - - - - - -
-5% to -15% 2 11,308,008 28% 0.19 -3.3% -7.9% -2.8%
-5% to 5% 8 18,448,914 46% 0.27 3.4% 2.3% 4.2%
5% to 15% 6 847,518 2% 0.11 9.7% 8.9% 9.7%
From 15% to25% 0 - - - - - -
25% and higher 0 - - - - - -
All Safety Net Hospitals 16 30,604,440 77% 0.23 2.4% 0.6% 3.1%

A relatively small number of hospitals would receive DSH funds using alternative allocation policies based on low-income utilization or gross revenues. For example, 13 hospitals would receive DSH if a low-income utilization measure that does not include Medicare SSI beneficiaries were used (Simulation A in Table 8.12). The three hospitals with the highest percentage of low-income patients would receive substantially more DSH funds than their financial risk and their total margins would be substantially above the average for Wisconsin hospitals. In comparison, Simulation C (based on financial risk) would result in DSH payments to 46 hospitals, including 16 of the 19 safety net hospitals.

Table 8.12 Alternative DSH Allocation Policies: Distribution of Funds WI Hospitals

Having few hospitals with relatively high low-income patient loads and/or financial risk makes it difficult to draw any conclusions about the overall effect the alternative allocation policies might have on hospital classes. However, the results in the hospital classes with only one or two hospitals illustrate that the choice of allocation measure can have substantial impact on individual hospitals. For example, the one hospital with 30-40% low-income patient gross revenues would have a DSH to financial risk ratio of .33 under Simulation A, .89 under simulation B, .52 under Simulation C, and .49 under Simulation D. In dollars, the hospital would receive:

  • Current law: $588,260
  • Simulation A: $2,316,574
  • Simulation B: $6,282,418
  • Simulation C: $3,657,925
  • Simulation D: $3,454,894

(See Appendix D Table D.3A-D.)

The results for this hospital also illustrates that the indirect measures of serving low-income patients instead of direct measures (e.g., percentage of gross revenues attributable to low-income patients x adjusted inpatient days x wage index instead of gross revenues attributable to low-income patients) have implications for how the funds are distributed. The hospital's relatively low costs help explain the relatively high DSH to financial risk ratio in Simulations C and D (.52 and .49, respectively). If the direct measurement were used instead, the hospital would have received about 50% less in DSH funds and would have had a DSH to financial risk ratio of .25 in Simulation C instead of .52.

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