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Michael Newell

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Medicare Disproportionate Share: 25% Is All You Get?

Posted by Michael Newell on Oct 29, 2014 2:18:35 PM

Through the Affordable Care Act (ACA), substantial changes were made to the former Medicare Disproportionate Share (DSH) payment methodology and those changes continue to cause a great deal of confusion on many levels.  One recurring theme is the notion that hospitals are only getting 25% of what they used to get and of course, that is not true.  However, while the former DSH payment methodology only comprises a portion of the new total payment, hospitals should be focused on what the total expected new payment might be both today and in the future.

 

The new DSH/UC payment methodology is comprised of two components - the so-called empirically justified component and a pro-rata share of a national uncompensated care pool established by CMS via estimates.  Without getting into the details (go HERE for those), a hospital's total DSH/UC payment is the sum of 25% of what the hospital would have received under the old DSH formula and a pro-rata share of the remaining 75% pool after an adjustment is made to reflect the change in the number of uninsured individuals nationally.

 

Using data recently published by CMS for fiscal year 2015, the “75% Pool” was reduced by 23.81% and will comprise of only 69.57% of the total expected payments.  Overall for 2015, what would have been a $13,383,462,196 billion program is now a $10,993,510,434 billion program and the difference represents hospitals’ contribution to the cost of the ACA insurance program.

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Topics: Medicare DSH Reimbursement, uncompensated care

About This Blog

The climate of provider reimbursement is ever-changing and this blog is intended to keep you up-to-date on the latest information regarding:

  • DSH Reimbursement
  • 340B Pharmacy Drug Discount Program
  • Compliance Issues
  • Litigation Surrounding Provider Reimbursement

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