What are Medicaid DSH Payments?

May 9, 2019

Last Updated: March 5th, 2024


What is Medicaid DSH?

  • The Medicaid disproportionate share hospital (DSH) program provides payments to safety net hospitals that serve a high proportion of Medicaid beneficiaries and uninsured patients.
  • The payments are essential for these hospitals to offset their uncompensated care costs from treating low-income patients.

What is the Medicaid DSH funding crisis?

  • In 2021, Congress tasked the federal Centers for Medicare & Medicaid Services (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 could cause an $8 billion loss in hospital payments over four years.
  • In New York, hospitals rely on $3.9 billion in DSH payments annually, more than any other state, according to KFF analysis.

Why does Medicaid DSH matter?

  • DSH funding is critical for hospitals in rural and low-income areas to maintain the level of service they provide to their communities, many of whom are underinsured and uninsured.
  • Safety net hospitals may be forced to close if they lose DSH funding.
  • Low-income, underinsured, and uninsured patients could be left without care if DSH-funded hospitals close.

What’s the situation today?

  • In March 2024, Congress agreed to delay the $8 billion in federal Medicaid DSH cuts, pushing them back for consideration to 2025.

The Healthcare Education Project fights to protect these important Medicaid DSH payments. To stay involved in this campaign, and to learn about the latest developments, please join our mailing list.