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November 2, 2016

MACPAC Considers DSH Targeting

October 27, 2016: At its October meeting, the Medicaid and CHIP Payment and Access Commission (MACPAC) considered policies to improve targeting of Medicaid Disproportionate Share Hospital (DSH) payments, with respect to both hospitals and states, but did not come to consensus on a recommended approach. To better target DSH payments to hospitals most in need, MACPAC staff presented options to (1) establish stricter criteria for receiving DSH funding (currently any hospital with at least one percent Medicaid utilization can be made eligible), (2) expand the definition of uncompensated care to include all of the services that hospitals provide, and (3) exclude payments for Medicaid “shortfalls” (unreimbursed Medicaid costs). The Commission also considered options for targeting the upcoming cuts in state DSH allotments among the states. Among the approaches discussed were (1) applying reductions first to states with unspent DSH allotments, (2) including both Medicaid and uninsured patients (not just uninsured) in allocating the cuts in order to minimize the impact of states’ decisions on Medicaid expansion, and (3) revising the uncompensated care factor in the allotment formula. Commissioners expressed concern about the need for more and better data and for a greater understanding of how DSH funding is being used before recommending significant changes.