A new CMS calculation for uncompensated care presents an opportunity and a compliance risk for DSH hospitals.
This article first appeared in the January/February 2018 issue of HealthLeaders magazine.
CMS allocated $6.8 billion for uncompensated care to hospitals who qualify under the Disproportionate Share Hospital (DSH) program for this fiscal year, and it changed two factors affecting how these funds are calculated, including how funds are allocated to individual hospitals, potentially creating both revenue opportunity and compliance risk for DSH hospitals.
The Affordable Care Act (ACA) changed how funds are distributed under the long-standing DSH program, providing for 75% of the funds for the overall program to be allocated for the uncompensated care hospitals provide to uninsured patients.
This amount is referred to as Factor 1 and was calculated to be roughly $11.7 billion in FY2018, up from $10.8 billion in FY2017.
The ACA provides for CMS to reduce the funds available under this program each year based on its estimate of the change in the number of uninsured patients, referred to as Factor 2.
CMS changed the data source used to calculate the "rate of uninsurance," resulting in a reduction in Factor 2 from 10% in FY2017 to 8.1% in FY2018.
Factor 3 is a hospital-specific factor representing its share of the total uncompensated care provided. This factor is used to calculate a per claim, flat dollar add-on amount for each inpatient claim.