Under the Medicaid DSH payments, hospital reimbursement is limited to the uncompensated costs of providing inpatient and outpatient hospital services to Medicaid-eligible individuals and uninsured individuals “who have no health insurance, or other source of third-party coverage, for the services furnished during the year.”
In the proposed rule, CMS would allow hospitals to count the cost of services to individuals who have health coverage that excludes medically necessary services as uncompensated care. Additionally, the cost of services for individuals that have exhausted all of their insurance benefits or reached lifetime insurance limits for benefits and services would also count as uncompensated care. However, costs associated with bad debt — including any unpaid co-insurance or deductibles — cannot be included in the calculation of the DSH limit for individuals with a source of third-party coverage.
CMS expects hospitals affected by the proposed rule to have higher DSH-eligible costs and therefore a higher DSH limit. Additionally, the rule is expected to cover more uncompensated care costs for services provided to people covered under the Indian Health Service.
The proposed rule will be published in the Jan. 18 issue of the Federal Register, and comments will be accepted through 30 days after publishing.
Related Articles on Disproportionate Share Payments:
MedPAC Recommends 1% Increase for Hospital Inpatient, Outpatient Services
Legislation Would Stop Cuts to Disproportionate Share Payments
Michigan Legislature Considers Proposals to Reallocate Funds for Disproportionate Share Payments
