WASHINGTON – Acting Health and Human Services Secretary Charles E. Johnson has announced that the federal government will increase its 2009 allotment for "Disproportionate Share Hospitals" by an additional $268 million in 2009.
"Millions of people rely on the care provided by their community hospitals," said Johnson. "Through the help provided by the Recovery Act, we can make sure they continue to get the care they need in those hospitals."
The money will reach hospitals indirectly. Technically, the Centers for Medicare and Medicaid Services provides each state with an annual allotment for eligible hospitals that serve a disproportionate share of low-income or
uninsured individuals, meant to account for higher costs associated with treating uninsured and low-income patients. The American Recovery and Reinvestment Act increases the 2009 allotment from approximately $11.06 billion to $11.33 billion.
In FY2006, the most recent data available, New York was the leading recipient among states, netting more than $3 billion in DSH payments from Medicaid (according to statehealthfacts.org). California received about $2.34 billion, while Texas, New Jersey and Pennsylvania rounded out the top five, each receiving more than $1 billion in DSH payments.
According to Paula Minnehan, vice president of finance and rural hospitals for the New Hampshire Hospital Association, the ARRA funds represent a useful "bump in the DSH" program.
"We believe New Hampshire is eligible to receive the bump, which will mean about $5 million more to our state [in 2009]," Minnehan said. Nearly 1 in 6 Medicaid dollars that New Hampshire receives comes from DSH allotments, according to statehealthfacts.org.
In order to tap into the additional funds, states will have to prove that they have used the existing FY2009 allotment for disproportionate share hospitals – not all states have spent their full DSH allocation in past years. States must request the additional funds from CMS as part of their quarterly Medicaid budget request and the funds will be distributed as separate Recovery Act DSH grants.
"Thousands of hospitals around the country are the first place many families take their sick children for care or the only place where some of the more than 45 million uninsured Americans can receive some form of healthcare," said Johnson. "The funding from the Recovery Act will help ensure hospitals can keep their doors open to the people who need care most."
Critics of the federal government's health initiatives have frequently targeted the Disproportionate Share Hospital program. In a 2008 issue brief from the Heritage Foundation, a conservative think tank, Christopher J. Meyer wrote, "The DSH program, while providing critical resources for safety-net facilities, is the subject of some controversy because some states have employed financial gimmicks."
"For example, many states were not using actual state appropriations for their share of DSH payments, and providers were not keeping all of their DSH dollars,” Meyer noted. “Thus, the bulk of DSH spending was not being used to cover safety-net hospitals' uncompensated care costs as Congress had intended. Instead, these schemes increased the funds available to such hospitals, leading to expansions in their programs, which resulted in more patients using their facilities."