Beginning with federal fiscal year 2014, the Affordable Care Act changed the methodology for reimbursing hospitals that treat a large percentage of indigent patients. Are you up to speed on the changes? In order to understand the changes implemented as a result of the Affordable Care Act (ACA), lets review the Medicare DSH reimbursement calculation as it was prior to the inception of ACA.
Pre-ACA Medicare DSH Calculation
The Medicare DSH calculation is a complex statutory formula consisting of two fractions:
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SSI Ratio as calculated by the Centers for Medicare & Medicaid (CMS)
- Medicaid Percentage as calculated through the cost report
The resulting sum of these two fractions determines if a provider ultimately qualifies for DSH reimbursement and how much reimbursement it would receive.
New Calculation under ACA
As a result of ACA, the amount of total reimbursement a provider may receive for discharges beginning October 1, 2013 (if qualification requirements are met), is now based upon two components not just the Medicare DSH calculation defined above:
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Empirically Justified DSH Payment
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Uncompensated Care (UC) Distribution
The Empirically Justified DSH Payment is 25% of what Medicare DSH would have been under the pre-ACA formula. In addition, the provider may also receive additional compensation based on their level of uncompensated care relative to all qualifying providers. A provider must be eligible for the Empirically Justified DSH payment in order to receive any UC payments.
Read more about the calculation and the latest IPPS final rule in our blog "CMS Posts 2018 IPPS Final Rule: Worksheet S-10 is a GO!"
