This presentation outlines a preliminary analysis of options to improve targeting of disproportionate share hospital (DSH) payments to providers and DSH allotments to states. Among the possible targeting approaches the presentation raises are:
- moving the current minimum federal eligibility criteria for DSH payment from a 1 percent Medicaid utilization rate to a higher threshold;
- expanding the DSH definition of uncompensated care to recognize the full range of services hospitals provide;
- excluding Medicaid shortfall from the DSH definition of uncompensated care;
- applying the DSH allotment to unspent DSH funding first;
- revising the uncompensated care factor used to distribute pending allotment reductions; and
- including both Medicaid and uninsured patients in the DSH allotment reduction formula.
MACPAC is required by statute to report on DSH payments annually, as part of its March report. The targeting options raised in the presentation lay the groundwork for future recommendations.