This study assessed the state of the Medicaid Disproportionate Share Hospital (DSH) funding program, the relationship between Medicaid payments and uncompensated care costs, and the implications of alternative methods for determining the reduction of Federal Medicaid allotments to states as required by the Affordable Care Act. The project analyzed (a) the financial performance of hospitals categorized by receipt of Medicaid DSH payments, level of uncompensated care, and share of hospitals' inpatient days that are Medicaid-covered patients, known as the Medicaid Inpatient Utilization Rate and (b) the potential effects of alternative methods for reducing DSH allotments to states as directed by the Affordable Care Act.
Among hospitals that received Medicaid DSH payments, those that were more dependent on these payments or that provided higher levels of uncompensated care tended to perform worse financially than other DSH hospitals. In contrast, DSH hospitals that had a high share of inpatients that were covered by Medicaid were no worse off financially than other DSH hospitals. Differences in methodologies can lead to substantial differences in the level of DSH reductions in states depending on the weight assigned to the different factors and whether states choose to implement Medicaid expansion.
Report Title: Medicaid Disproportionate Share Hospital Payments Analysis
Agency Sponsor: OASPE, Office of the Assistant Secretary for Planning and Evaluation
Federal Contact: Thomas Musco 202-690-7272
Performer: George Washington University
Record ID: 9753 (September 1, 2012)