CMS has issued an interim final rule on Medicare's disproportionate share hospital payments for fiscal year 2014, altering the process for making interim and final payments to eligible hospitals.
Medicare DSH payments are awarded to hospitals that provide high levels of charity care, similar to how Medicaid DSH payments are given to hospitals with high volumes of Medicaid patients. Starting Monday, under the Patient Protection and Affordable Care Act, DSH payments will be reduced to hospitals over the next six years. Medicaid DSH payments will be cut 50 percent by 2019, or $14.1 billion total, while Medicare DSH payments will be slashed 75 percent by 2019, or $49.9 billion.
Specifically, starting Monday, hospitals eligible for Medicare DSH payments will receive 25 percent of the amount they previously would have received, while the remaining 75 percent will be distributed based on hospitals' uncompensated care amounts. According to the rule, CMS will align final Medicare DSH payments with each individual hospital's cost reporting period instead of issuing payments only on the government's fiscal year.
Last month, the American Hospital Association advocated for this change, saying if CMS did not allocate DSH funds for each hospital's cost reporting period, it could result in delayed payments and overly messy accounting.
CMS also said in the rule that it will make sure hospitals within the Indian Health Service are included into certain factors of the DSH payment calculations.
In March, Moody's Investors Service released a report, which said hospitals that receive large sums of Medicare and Medicaid DSH payments will face significant credit challenges over the next several years.
CMS is accepting comments on the interim final rule through Nov. 29.
More Articles on DSH Payments:
Senate Bill Would Delay Disproportionate Share Hospital Cuts
CMS Issues Final Rule Cutting $1.1B in Medicaid DSH Payments
HHS: Law Doesn't Require Charity Care to Count in DSH Payment Calculation