CMS proposes Medicaid DSH reduction methodology

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CMS released a proposed rule on July 28th that delineates a methodology for implementing the Affordable Care Act aggregate reductions to state Medicaid Disproportionate Share Hospital allotments beginning in fiscal year 2018. The ACA reduces state Medicaid DSH allotments for FY 2018 through FY 2025 in anticipation of lower uninsured rates and lower levels of hospital uncompensated care. The DSH Health Reform Methodology separates states into non-low DSH states and low DSH states.  The largest percentage reductions will be imposed on:

  • States with the lowest uninsured rates;
  • States that do not target their DSH payments on hospitals with high volumes of Medicaid inpatients; and
  • States that do not target their DSH payments on hospitals with high levels of UCC.

Comments on the proposed rule can be submitted electronically at http://www.regulations.gov by August 28th.