CMS Clarifies Medicaid DSH Rule
Last week the Centers for Medicare & Medicaid Services announced a final rule addressing the treatment of third-party payers in calculating Medicaid uncompensated care costs. This calculation affects individual hospitals’ Medicaid disproportionate share (Medicaid DSH) limit.
According to CMS,
This rule clarifies federal requirements regarding the treatment of third party payers in determining the hospital-specific Medicaid DSH payment limit, which is set by statute as a hospital’s “uncompensated costs” incurred in providing hospital services to Medicaid and uninsured patients.
The final rule makes clearer our existing policy that uncompensated costs include only those costs for Medicaid eligible individuals that remain after accounting for all payments received by or on behalf of Medicaid eligible individuals, including Medicare and other third party payments. This is consistent with the statutory requirements governing Medicaid DSH and applicable limits.
All Pennsylvania safety-net hospitals receive Medicaid DSH payments.
See the full rule here.


The Safety-Net Association of Pennsylvania has prepared a detailed review of those provisions. Officials of safety-net hospitals who would like to receive a copy of this memo may request one by using the “contact us” link on the upper right-hand corner of this screen.


Earlier this year the chairmen of the Senate Finance Committee and the House Energy and Commerce Committee asked the U.S. Government Accountability Office to answer these and other questions. Now, the GAO has published its answers in a new report titled Key Policy and Data Considerations for Designing a Per Capita Cap on Federal Funding. Find that report
In particular, SNAP opposes the manner in which CMS would treat payments from Medicare and third-party payers made on behalf of Medicaid-eligible individuals.