§2. Modifying certain limitations on disproportionate share hospital payment adjustments under the Medicaid program
This section revises limitations on Medicaid disproportionate share hospital (DSH) payment adjustments under SSA section 1923(g) (42 U.S.C. 1396r-4(g)) by (1) broadening the definition of uncompensated care costs in paragraph (1)(A)(ii) to include, for subclause (III), payments under Medicare (title XVIII) or an applicable plan (as defined in SSA section 1862(b)(8)(F)); (2) expanding the definition of individuals whose costs count toward uncompensated care in paragraph (1)(B) to include, for new clause (iii), Medicaid-eligible individuals for whom the state plan or waiver is the payor after Medicare or applicable plan benefits if hospital costs exceed such payments; (3) striking paragraph (2), which excluded certain hospitals (previously referenced in paragraph (1)(A)); and (4) redesignating paragraph (3) as paragraph (2) with conforming changes. (DSH payments provide federal funds to hospitals serving high volumes of low-income patients to offset uncompensated care costs; these revisions expand the costs and patient populations counted toward the payment cap, potentially increasing eligible adjustments.)
The revisions apply to state plan rate years beginning on or after the date of enactment. For rate years beginning after October 1, 2021, and before enactment, states may elect to apply unspent DSH allotments to increase prior payment adjustments consistent with the revised limits (without exceeding the applicable allotment under subsection (f)), subject to no recoupment of prior payments, authority for retroactive state plan modifications (approved by the Secretary with audit deadlines under subsection (j)(2)), and inclusion in the next annual report under subsection (j)(1).