The federal government must include uninsured patients that hospitals serve under state Medicaid waivers when calculating hospitals’ Medicare DSH payments, a federal court has ruled.

In the case of Baylor All Saints Medical Center, et al. v. Xavier Becerra, federal policymakers had invoked a 2023 regulation that excluded counting care provided to patients serve by DSH-eligible hospitals providing care through state Medicaid waivers – generally, through uncompensated care pools.  A group of DSH-eligible hospitals in Texas sued over the regulation because its implementation reduced their Medicare DSH funding – money intended to help hospitals that care for especially large numbers of low-income and uninsured patients.  The 2023 regulation changed practices that had been in effect since 2006, enabling hospitals to receive Medicare DSH payments calculated in part by including the patients they served through waiver programs in the calculation of their overall total of low-income patients.  The court found the 2023 regulation to be unlawful.

Learn more about the Medicare DSH case in Texas, the challenge to federal regulations, and the potential implications of the suit and subsequent ruling from the Healthcare Dive article “Court strikes down HHS change to low-income payment formula in win for Texas hospitals” and from the federal court ruling in the case.