Accounting for Third-Party Payments in the Disproportionate Share Hospital Definition of Medicaid Shortfall

Medicaid disproportionate share hospital (DSH) payments to an individual hospital cannot exceed the hospital’s uncompensated care costs, defined as the sum of unpaid costs of care for uninsured individuals and Medicaid shortfall, and the difference between a hospital’s cost of care for Medicaid-eligible patients and the payments that it receives for those services. The presentation discusses federal policy affecting the definition of Medicaid shortfall for the purposes of DSH and how this definition is changing as a result of administrative actions and court rulings.  The presentation concludes by discussing alternative definitions that could be used.