Disproportionate-Share Hospital Payment Reductions May Threaten the Financial Stability of Safety-Net Hospitals (Health Affairs)

Safety-net hospitals in California rely on disproportionate-share hospital (DSH) payments to help cover uncompensated care costs and underpayments by Medicaid, known as Medicaid shortfalls.   The Affordable Care Act (ACA) anticipates that insurance expansion will increase the revenues of safety-net hospitals, and DSH payments are scheduled to be reduced accordingly.   Using the California Simulation of Insurance Markets (CalSIM) to model future public hospital patient mix, authors of the article say a $1.54 billion shortfall could result from DSH reductions and uncompensated care costs, which could outstrip the revenue generated from ACA insurance expansion, and leave public hospitals' financial stability at risk.    

Publication Authors:

• Dylan H. Roby, PhD
• Anna C. Davis
• Katherine Neuhausen
• Jack Needleman, PhD, FAAN
• Robert H. Brook
• David Zingmond, M.D., Ph.D.