Disproportionate Share Hospital
WHAT IS DSH?
DSH stands for Disproportionate Share Hospital payments. Many rural and safety net hospitals provide care for a large number of uninsured and underinsured patients and receive funding to help offset the uncompensated costs of care. These are called DSH payments.
Why Does It Matter?
DSH funding is critical for hospitals in rural and low-income areas to maintain the level of service they provide to their communities
DSH hospitals have a low number of patients with private insurance, so they cannot shift these losses to insurance providers.
Without DSH funding, these hospitals would be forced to reduce services, lay off staff, or close entirely—all devastating options for the communities they operate in.
DSH is a Medicaid program. The federal Centers for Medicare and Medicaid Service (CMS) provides this funding and states provide matching funds.
In New York, hospitals rely on $3.9 billion in DSH payments annually, more than any other state, according to KFF analysis.
Threats to DSH funding
In a 2017 rule by the CMS, New York’s DSH allocation would have been reduced by about $330 million in 2018, with the reductions increasing until they reach nearly $1 billion a year by 2022.
In 2021, Congress tasked the federal CMS to clarify DSH calculations, and passed a rule to reduce potential overpayments. Unfortunately, this rule could limit hospitals’ abilities to combine government and private funds to cover a service, and was potential cause for an $8 billion loss in hospital payments over four years.
In March 2024, Congress agreed to delay $8 billion in federal Medicaid DSH cuts, pushing them to 2025.
The federal government’s scheduled reduction of DSH allotments, which were to have started in FY2024, has been further delayed through September 30, 2028. This means the $8 billion annual cut will not happen in 2025, providing a more stable funding environment for hospitals.
