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Policy Options for Structuring DSH Allotment Reductions

Medicaid disproportionate share hospital (DSH) allotments vary widely by state based on state DSH spending in 1992 when DSH limits were first established.

DSH allotments are scheduled to be cut in FY 2020, reflecting an assumption initially made under the Patient Protection and Affordable Care Act (P.L. 111-148 as amended) that increased coverage from Medicaid expansion and health insurance exchanges would reduce hospital uncompensated care costs.

The Commission is working to recommend changes to how DSH allotment reductions will be implemented based on measures other than historical spending. This presentation discusses a range of policy options that could provide the basis for March 2019 recommendations to distribute DSH dollars more rationally.