Disproportionate Share Hospital Funding (DSH): What Is It, And Why Does It Matter?

September 18, 2017

What is it?

Many rural and safety net hospitals provide care for a large number of uninsured and underinsured patients.

These safety net and rural hospitals receive funding to help offset the uncompensated costs of care. These are called DSH payments.

DSH is a Medicaid program. The Centers for Medicare and Medicaid Service (CMS) provides this funding and states provide matching funds.


Why does it matter?

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 and New York State

Under the proposed funding cuts, New York would lose $329 million in federal funding that goes towards rural and safety-net hospitals.

DSH funding helps the financial viability of these New York hospitals, 27 of which are on a state “watch list” because of their finances.


The threat to DSH

  • Under a recent rule by the CMS (the federal Centers for Medicare and Medicaid), New York’s DSH allocation would be reduced by about $330 million in 2018, with the reductions increasing until they reach nearly $1 billion a year by 2022.
  • New York’s public and voluntary safety net hospitals cannot afford such cuts.
  • Twenty-seven hospitals are on a State ‘watch list’ already, because of their financial situation.
  • The DSH cuts could force some of these hospitals to cut services.
  • Some hospitals may have to close entirely.
  • The loss of these services will affect the most vulnerable of our communities.