In this episode, we’re pleased to welcome back BESLER’s Reimbursement Director, Christina Brown, to give us a sample of what she will be sharing for the Disproportionate Share and Medicaid Eligibility Reviews (DSH) 101 webinar on January 11, 2023, at 1 PM ET.Learn how to listen to The Hospital Finance Podcast® on your mobile device.
Highlights of this episode include:
- What is DSH?
- Do all hospitals receive the add-on DSH payment?
- How Medicare determines how much a hospital will receive
- Critical data elements
- What is new that impacts DSH
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Christina Brown, BESLER’s Reimbursement Director. In this episode, Christina will give us a little sample of the information she will be sharing in the Disproportionate Share and Medicaid Eligibility Reviews, commonly referred to as DSH, 101 Webinar which she’s hosting on January 11th, 2023, at 1:00 PM Eastern Time. Thank you for joining us today, Christina.
Christina Brown: Thank you, Kelly. I appreciate you having me.
Kelly: Well, great. Well, let’s go ahead and jump in today. I guess to start off, what is DSH?
Christina: So that’s a great question. So, the acronym Dish, D-S-H, stands for Disproportionate Share Hospitals. And when we talk about DSH, there’s actually Medicare DSH and Medicaid DSH. For purposes of the webinar, I’ll be discussing Medicare DSH. And when we talk about DSH, we are specifically referring to hospitals that meet a certain criteria in order to receive an add-on reimbursement payment. This supplemental add-on payment is meant to supplement for the amount of Medicaid population that is served by a hospital. The reason for this payment is based on the understanding that hospitals that serve a large percentage of Medicaid population are likely located in an area that also has a high rate of patients who receive charity. In order to allow hospitals to serve populations with a certain amount of uncompensated care, these hospitals receive the DSH payments.
Kelly: Great. And you mentioned some specific criteria. Do all hospitals receive the add-on DSH payment?
Christina: That’s also a good question. Unfortunately, Medicare is very particular with who receives DSH. And while all hospitals have populations of Medicaid and uncompensated care, not all hospitals will receive DSH payments. The DSH add-on payment is, like I said, meant to supplement hospitals that serve a large population of Medicaid patients in comparison to the total patient population. So, a hospital must meet certain eligibility requirements to receive the DSH payments, such as it must be a general short-term care hospital, and must meet the eligibility percent criteria, which is equal to the sum of the percentage of Medicare inpatient days attributable to patients eligible for part A and supplemental security income, or as is also known as the SSI percentage. It would be that plus the percentage of total inpatient days attributable to patients eligible for Medicaid, or as it is also known as the Medicaid eligible days to total patient days.
When these two percentages get added together, if a hospital reaches that magical number of 15%, then the hospital will qualify to receive a DSH payment. That is what is known as the primary method. There is also an alternate special exception method, which you may hear that it’s also known as the pickle method, where a hospital is eligible for a specific Medicare DSH adjustment. And to qualify for that, it must meet all three of the following criteria, which is, one, it must be located in an urban area. Two, it must have 100 or more beds, and three, can demonstrate more than 30% of their total net inpatient care revenues come from state and local government sources or indigent care other than Medicare or Medicaid.
Kelly: Okay, makes sense. And for eligible hospitals, how does Medicare determine how much a hospital will receive?
Christina: So, the amount received will vary depending on three factors. And I will actually go over all the factors in detail during the webinar. But in summary, factor one is 75% of the estimated DSH payments that would have been made under the old DSH methodology. And factor two is one minus the percent change in the percent of individuals under the age of 65 who are uninsured. And then factor three is a percentage which is equal to a hospital’s amount of uncompensated care relative to the amount of uncompensated care for all DSH hospitals. And that is reported on worksheet S-10. So, for hospitals that qualify for DSH, not only is accurate reporting of the Medicaid eligible days critical, but also the data that is reported on worksheet S-10 of the hospital’s cost report, which is mainly the amounts reported as uncompensated care that is for charity and bad debt.
Kelly: Thank you. Very helpful. And speaking of data reported on the cost report, what are some of those critical data elements you mentioned?
Christina: So, as you as you gather from what was previously mentioned, an accurate detailed listing of total patients is imperative. Gathering the patient day counts and patient types and eligibility all goes into the calculation of computing the DSH percentage. It is important to know that patients that are eligible for Medicaid, even if Medicaid has not paid, as there could be lag time in remittance and reporting, that would result in underreporting of Medicaid eligible days. In addition to accurately reporting Medicaid eligible days, the data that is reported on S-10 also becomes important. I go into greater detail of the S-10 data on the S-10 Webinar. But essentially, accurately reporting full patient detail for charity and bad debt right off accounts also becomes important, since the amount dispersed for DSH payments relies on the total uncompensated care reported on worksheet S-10.
Kelly: Okay, great. And for those familiar with DSH, it’s been around for a while. Can you tell me if there is anything significantly new that impacts DSH?
Christina: That is a great question, Kelly. Yes, there has definitely been some evolution in the calculation of DSH payments, not only to the total pool amount methodology, but also in how each hospital’s share of that pool is calculated. As I mentioned previously, factor one states that it is now 75% of what would have been calculated under the old methodology, which was prior to change as resulting from the Affordable Care Act. What that means is that for the FY 2023 IPPS final rule, the DSH payment estimate was $13.949 billion. But based on the 75% calculated in factor one, the actual amount of factor one is $10.461 billion. Changes to the calculation methodology that came into effect based on the FY 2023 IPPS final rule relate to the calculation of factor three. As I stated previously, factor three used the uncompensated care amount from the hospital’s worksheet S-10. For FY 2023, the amount used will come from the hospital’s 2018 and 2019 audited cost reports. But for FY 2024, CMS expects to start using a three-year rolling average in determining the factor three percentage, which will directly impact the amount of the uncompensated care pool that a hospital will receive.
Kelly: Great. Thank you for that. And thank you so much for joining us today, Christina, and for these great insights.
Christina: Thanks so much, Kelly. It’s been a pleasure, as always.
Kelly: Yes. And we appreciate you giving us a glimpse into what you plan to share on your upcoming live webinar on Disproportionate Share and Medicaid Eligibility Reviews, or DSH, 101 on January 11, 2023, at 1:00 PM Eastern Time. And as a bonus, you can earn CPE. And thank you all for joining us for this episode of the Hospital Finance Podcast. Until next time…
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