On December 3, 2014, CMS published a final rule that defines “uninsured” for purposes of calculating the Medicaid hospital-specific disproportionate share hospital (DSH) payment limit. Under the Social Security Act, DSH payments to a hospital cannot exceed the uncompensated costs of furnishing hospital services by the hospital to individuals who are Medicaid-eligible or “have no health insurance (or other source of third party coverage) for the services furnished during the year.” The final rule provides this test will be applied on a service-specific basis; that is, the calculation of uncompensated care for purposes of the hospital-specific DSH limit will include the cost of each service furnished to an individual by that hospital for which the individual had no health insurance or other source of third party coverage. Although the final rule’s definition of uninsured may affect the calculation of the hospital-specific DSH limit, the rule does not modify the DSH allotment amounts and will have no effect on a state’s ability to claim federal financial participation (FFP) for DSH payments made up to the published DSH allotment amounts. The final rule also provides additional clarification to states and hospitals regarding costs eligible for inclusion in the calculation of the hospital-specific DSH limit. The rule is effective on December 31, 2014.