The Medicaid Disproportionate Share Hospital Payment Program

Brief

The Medicaid Disproportionate Share Hospital Payment Program

Background and Issues

Abstract

Federal law requires state Medicaid agencies to take into account the situation of hospitals that serve a disproportionate number of low-income patients with special needs when determining payment rates for inpatient hospital care. Expenditures for this Medicaid disproportionate share hospital (DSH) payment now account for 1 of every 11 (federal and state) dollars spent on Medicaid in 1996. This policy brief describes the origins and evolution of DSH; discusses DSH legislation enacted during the 1990s when DSH expenditures first began to escalate; and highlights the federal DSH provisions included in the Balanced Budget Act of 1997.

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