On September 18, CMS published a final rule implementing reductions required by the Affordable Care Act (ACA) for the disproportionate share hospital (DSH) program.  The Medicaid DSH program provides federal funding to hospitals that serve a higher-than-average number of uninsured patients.  The ACA required a cut in federal DSH funding based on an expected reduction in uncompensated care costs resulting from expansion of coverage through increased access to health insurance through Health Insurance Exchanges and the expansion of Medicaid. 

The final rule sets forth the methodology to implement the annual reductions for fiscal years 2014 and 2015, and it includes additional DSH reporting requirements for use in implementing the DSH health reform methodology.

Because some states have elected not to expand their Medicaid programs, CMS noted that they intend to account for the different circumstances among states in the DSH funding formula in future rulemaking, when additional data is available.  However, for fiscal years 2014 and 2015, the DSH funding formula does not account for differential Medicaid coverage expansions.

To view the final rule, which takes effect on November 18, 2013, click here.