The United States government

Federal government of the United States

The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

 provides special funding to hospitals who treat significant populations of indigent patients through the Disproportionate Share Hospital (DSH) programs. The program seeks to continue to encourage hospitals to provide health services for these individuals.

There are DSH programs for both Medicare

Medicare (United States)

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

 and Medicaid

Medicaid

Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...

, as well as a program for pharmacies, known as the 340B program.

Qualifying

A hospital can qualify for the Medicare DSH adjustment by using one of the following methods:

Primary method

The primary method is based on a complex statutory formula that results in the Medicare DSH patient percentage, which is equal to the sum of the percentage of Medicare inpatient days attributable to patients entitled to both Medicare Part A and Supplemental Security Income

Supplemental Security Income

Supplemental Security Income is a United States government program that provides stipends to low-income people who are either aged , blind, or disabled. Although administered by the Social Security Administration, SSI is funded from the U.S. Treasury general funds, not the Social Security trust fund...

 (SSI) and the percentage of total inpatient days attributable to patients eligible for Medicaid but not eligible for Medicare Part A.

In order to maximize their reimbursement, many hospitals and/or their consultants will use Medicaid Eligibility Vendors such as Healthcare Payment Specialists (HPS)http://www.healthcarepayment.com or Government Data Serviceshttp://www.govdataservices.com/ to assist in the identification of Medicaid eligible days.

Alternate Special Exemption Method

The alternate special exception method is for urban hospitals with more than 100 hospital bed

Hospital bed

A hospital bed is a bed specially designed for hospitalized patients or others in need of some form of health care. These beds have special features both for the comfort and well-being of the patient and for the convenience of health care workers...

s that can demonstrate that more than 30 percent of their total net inpatient care revenues, other than Medicare or Medicaid, come from state and local government sources for indigent care, such as for Medically indigent adult

Medically Indigent Adult

Medically indigent adults "" in the health care system of the United States are persons who do not have health insurance and who are not eligible for other health care coverage, such as Medicaid, Medicare, or private health insurance...

s.

Number of Beds in Hospital Determination

Number of inpatient care bed days attributable to units or wards generally payable under the Inpatient Prospective Payment System excluding beds otherwise countable used for outpatient observation, skilled nursing swing-bed, or ancillary labor/delivery

Childbirth

Childbirth is the culmination of a human pregnancy or gestation period with the birth of one or more newborn infants from a woman's uterus...

 services divided by the number of days in the cost reporting period.

History

The Medicare DSH adjustment provision under Section 1886(d)(5)(F) of the Social Security Act was enacted by Section 9105 of the Consolidated Omnibus Budget Reconciliation Act of 1985

Consolidated Omnibus Budget Reconciliation Act of 1985

The Consolidated Omnibus Budget Reconciliation Act of 1985 is a law passed by the U.S. Congress on a reconciliation basis and signed by President Reagan that, among other things, mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving...

 and became effective for discharges occurring on or after May 1, 1986.

In 1998, more than $15 billion in Medicaid DSH payments were issued to hospitals."The Medicaid DSH Program And Providing Health Care Services to the Uninsured: A Look at Five Programs", March 2001, The Health Policy Center of The Urban Institute, 2100 M Street, NW, Washington, DC 20037

Section 402 of the Medicare Prescription Drug, Improvement, and Modernization Act

Medicare Prescription Drug, Improvement, and Modernization Act

The Medicare Prescription Drug, Improvement, and Modernization Act is a federal law of the United States, enacted in 2003. It produced the largest overhaul of Medicare in the public health program's 38-year history.The MMA was signed by President George W...

 of 2003 (MMA) states that effective for discharges occurring on or after April 1, 2004, the Medicare DSH payment adjustment for rural hospitals with fewer than 500 beds and urban hospitals with fewer than 100 beds has been increased. The cap on the adjustment for these hospitals will be 12 percent, except for hospitals classified as Rural Referral Centers (RRC). Per section 5002 of the Deficit Reduction Act of 2005

Deficit Reduction Act of 2005

The Deficit Reduction Act of 2005 is a United States Act of Congress concerning the budget, that became law in 2006.-Legislative history:The Senate's version passed after a tie-breaking vote was cast by Vice President Dick Cheney. The bill passed the chamber with no Democrats and five Republicans...

, as of October 1, 2006 Medicare-Dependent Hospitals (MDH) will also be exempt from the one percent cap. The formulas to establish a hospital’s Medicare DSH payment adjustment are based on the following:

• Hospital’s location
• Number of beds
• Status as a RRC or MDH