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Winter 2020 - Integrated Care

CMS Finalizes Rule for Cuts to Medicaid DSH Payments

The Centers for Medicare and Medicaid Services (CMS) published a final rule for calculating state Medicaid disproportionate share hospital (DSH) cuts in the amount of $4 billion in 2020 and $8 billion for each subsequent year through 2025. The method considers the rate of uninsured in each state, the number of Medicaid inpatients, the level of uncompensated care in the state and other budget neutrality factors.

The DSH health reform methodology encourages states to target remaining DSH payments to hospitals caring for the most low-income patients by incorporating five factors:

  • An adjustment factor to impose smaller reductions on low-DSH states;
  • An adjustment factor to impose larger reductions on states with low uninsured percentages (UPF);
  • An adjustment factor to impose larger reductions on states that do not target DSH funds to hospitals that treat a high volume of Medicaid inpatients (HMF);
  • An adjustment factor to impose larger reductions on states that do not target DSH funds on hospitals with high levels of uncompensated care (HUF); and
  • An adjustment factor to account for certain waiver states that used DSH dollars for coverage expansion.

CMS finalized its proposal to change the weights for the three targeting factors that were previously equally weighted: UPF, HMF and HUF. The UPF adjustment factor would receive a 50 percent weight, with HMF and HUF receiving 25 percent. CMS also finalized a state-specific cap to limit the annual DSH allotment reduction to 90 percent of a state’s original unreduced DSH allotment for that fiscal year.

References

  1. Brady M. The CMS Finalizes Rule for Cuts to Medicaid DSH Payments. Modern Healthcare, Sept. 23, 2019. Accessed at www.modernhealthcare.com/payment/cms-finalizes-rule-cuts-medicaid-dsh-payments?utm_source=modern-healthcare-alert&utm_medium=email&utm_campaign=20190923&utm_content=hero-readmore.
  2. Schwartz R. CMS Finalizes Methodology for Oct. 1 Medicaid DSH Cuts. America’s Essential Hospitals, Sept. 24, 2019. Accessed at essential hospitals.org/policy/cms-finalizes-methodology-oct-1-medicaiddsh-cuts.
BSTQ Staff
BioSupply Trends Quarterly [BSTQ] is the definitive source for industry trends, news and information for the biopharmaceuticals marketplace. With timely and critical information, each themed issue covers topics ranging from product breakthroughs, industry insights and innovations, up-to-the-minute news on the latest clinical trials, accessibility, and service and safety concerns.