Number: 97-483 Title: Medicaid Disproportionate Share Payments Authors: Jean Hearne, Domestic Social Policy Division Abstract: Today, a state's DSH payments cannot exceed an allotment amount, calculated based on a statutory formula, for that state. States must define, in their state Medicaid plan, hospitals qualifying as DSH hospitals and DSH payment formulas. DSH hospitals must include at least all hospitals meeting minimum criteria and may not include hospitals that have a Medicaid utilization rate below 1%. The DSH payment formula also must meet minimum criteria, and DSH payments for any specific hospital cannot exceed a hospital-specific cap based on the unreimbursed costs of providing hospital services to Medicaid and uninsured patients. DSH payments for mental hospitals cannot exceed an aggregate cap based on a percentage of such payments in 1995. However, within these broad guidelines, states also have a great deal of discretion in designating DSH hospitals and calculating adjustments for them. For this reason, Congress has required states to report the methods used to identify and pay DSH hospitals and the payments made to each of the identified hospitals. Annual state reporting, however, is not yet being routinely collected by the Centers on Medicare and Medicaid Services (CMS). Congress has intervened a number of times to change various features of the DSH allotments, sometimes to reduce payments below the levels provided for in the 1991 legislation and other times to provide additional allotment funds. Statutory changes are described in this report. Pages: 29 Date: July 30, 2007