Issue Brief

No. 849

CMS's Proposed Rule Implementing the ACA-mandated Medicaid DSH Reductions
June 25, 2013


Kathryn Linehan


State Medicaid programs make Medicaid disproportionate share hospital (DSH) payments to hospitals to help offset costs of uncompensated care for Medicaid and uninsured patients. Unlike most Medicaid spending, annual DSH allotments for each state are capped. Under the Patient Protection and Affordable Care Act of 2010 (ACA), DSH payments will decrease starting in fiscal year (FY) 2014 and continuing through FY 2020. This paper describes the proposed rule for reducing these federal allotments, which was released on May 15, 2013, by the Centers for Medicare & Medicaid Services (CMS). Comments on the proposed rule are due July 12, 2013.

2014 UPDATE:

The Protecting Access to Medicare Act of 2014, PL 113-93, delayed the Medicaid DSH cuts until FY 2017, extended the cuts through 2024, and increased the size of the total reductions to $35.1 billion.

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