Medicaid disproportionate share hospital (DSH) payments offset hospital uncompensated care costs for Medicaid-enrolled and uninsured patients. During economic recessions, Medicaid enrollment and the number of people who are uninsured increases.
During the 2020 economic recession, Congress implemented countercyclical Medicaid policy by temporarily increasing the federal medical assistance percentage (FMAP) for Medicaid spending. However, doing so had the perverse effect of lowering total DSH funds available to states to pay for uncompensated care.
This presentation provided two policy options that would increase federal support to states during future economic recessions by tying DSH allotments to each state’s FMAP. Under these set of policy options, temporary increases in the FMAP would lead to greater federal support for DSH instead of decreasing total DSH funding.