Hospitals Face Significant Medicaid DSH Cuts This Year

January 23, 2023

Congress will need to address a significant Medicaid disproportionate share hospital (DSH) cut this year. Under current law, $8 billion in DSH cuts are scheduled to begin October 1, 2023, and continue annually through Federal fiscal year 2027. These cuts would be catastrophic for safety net hospitals and could force many of them to reduce services or even permanently close.

Congress must delay the DSH cuts for at least two more years so that financially struggling hospitals can continue caring for vulnerable communities and low-income individuals.

In addition, the Federal government caps the amount of DSH funding that individual hospitals can receive at their “DSH cap”—their losses from treating Medicaid patients and the uninsured. The current DSH cap calculation excludes Medicaid shortfalls from services provided to Medicaid-eligible beneficiaries who are dually eligible for Medicare or other coverage. This policy will result in significant cuts to safety net hospitals and will reduce New York hospitals’ Medicaid DSH caps by an estimated 25%. GNYHA urges Congress to allow hospitals to include in their DSH cap calculation Medicaid shortfalls from Medicare dual-eligible patients and individuals dually covered by an “applicable plan.”

GNYHA has begun an aggressive Federal advocacy campaign to delay the DSH cuts and resolve issues with the current policy. GNYHA also will establish a working group focused on DSH issues and advocacy.