Disproportionate Share Hospitals Brace for Significant Reduction in Medicare Payments

October 1, 2013 will mark the first year eligible hospitals will receive a reduced Medicare Disproportionate Share Hospital (DSH) payment. Section 3133 of the Patient Protection and Affordable Care Act requires a mandatory reduction of Medicare DSH payments beginning in federal fiscal year 2014, with additional reductions in subsequent federal fiscal years.

DSH eligible hospitals will receive 25% of the DSH reimbursement amount previously received plus an "add-on" payment based on their share of the national uncompensated care pool. How your payments are calculated is made up of two components: Empirically Justified Medicare DSH Payments and Uncompensated Care Payments.  

• Empirically Justified Medicare DSH Payment: 25% of the amount a hospital previously received under the original statutory formula for Medicare DSH payments.
• Uncompensated Care Payments: The hospital's calculated share of uncompensated care multiplied by the base pool of available funds. The hospital's calculated share will be expressed as a fraction/percentage, then adjusted and then multiplied by the total pool of available funds.  

Example: Hospital XYZ's fiscal year 2014 DSH Payment calculation would be: [$9,253,500,000 (the total pool of available funds) x 0.888 (the adjustments factors made by CMS) x 0.00064419 (the specific hospital's uncompensated care fraction/percentage provided by CMS)] + 25% of your Medicare DSH payments previously received based on the old statutory formula.

Don't Be Taken By Surprise

To learn more about regulations impacting your DSH payments and how your future payments will be calculated, join us for a free webinar on Tuesday, September 10, from 11:00am - 12:00pm CDT.

If you have any questions about how these regulations will impact your hospital, please contact Eddie Phibbs, Jade Wanzek or your Eide Bailly representative.