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Recommendations for Automatic Adjustments to Disproportionate Share Hospital Allotments

Staff presented a draft chapter for the June 2023 report to Congress with four recommendations on providing automatic adjustments to disproportionate share hospital (DSH) allotments when there are changes in the federal medical assistance percentage (FMAP).

The chapter includes a package of four recommendations related to:

  • Improving the relationship between total DSH funding and measures of need for DSH payments should allotment reductions go into effect;
  • Changing the basis of DSH allotments from federal funding to total funding;
  • Including DSH allotments in a countercyclical financing mechanism for Medicaid to preserve DSH funding when there is an economic recession; and
  • Removing the requirement for the Centers for Medicare & Medicaid Services (CMS) to compare DSH allotments to Medicaid spending so that allotments can be finalized in a timelier manner.