Variation And Changes In The Targeting Of Medicaid Disproportionate Share Hospital Payments

Abstract

Little is known about how Medicaid disproportionate share hospital payments, which are intended to support hospitals that serve low-income patients, are allocated or whether allocation patterns have changed over time. We employed alternative definitions of targeting, or the degree to which allocations were made in a manner consistent with the statutory goals and intent of the program, to examine disproportionate share hospital payment allocations in forty-nine participating states. The most recent data indicate that 57.2 percent of acute care hospitals received disproportionate share hospital payments, totaling more than $14.5 billion, in 2015. The majority of payments went to hospitals with Medicaid shares above the state-specific median (89.1 percent), hospitals with uncompensated care shares above the state-specific median (60.6 percent), or hospitals deemed as disproportionate share per statutory definitions (64.6 percent). However, among all hospitals receiving these payments, up to 31.6 percent of payments were allocated to hospitals that did not meet a given definition, and 3.2 percent went to hospitals that met none of them. These findings suggest that although the majority of the payments were targeted to hospitals serving low-income patients, opportunities exist to better align allocation with statutory goals and intent or to revise applicable statute.