Last week the Centers for Medicare & Medicaid Services announced a final rule addressing the treatment of third-party payers in calculating Medicaid uncompensated care costs.  This calculation affects individual hospitals’ Medicaid disproportionate share (Medicaid DSH) limit.

According to CMS,

This rule clarifies federal requirements regarding the treatment of third party payers in determining the hospital-specific Medicaid DSH payment limit, which is set by statute as a hospital’s “uncompensated costs” incurred in providing hospital services to Medicaid and uninsured patients.

The final rule makes clearer our existing policy that uncompensated costs include only those costs for Medicaid eligible individuals that remain after accounting for all payments received by or on behalf of Medicaid eligible individuals, including Medicare and other third party payments. This is consistent with the statutory requirements governing Medicaid DSH and applicable limits.

All private safety-net hospitals receive Medicaid DSH payments.

See the full rule here.