Deadline Approaching on Medicaid’s Low Disproportionate Share Hospital Increases

Oklahoma One of Twenty States That Would Be Impacted If Congress Fails To Act

WASHINGTON, DC - U.S. Senator Jim Inhofe (R-Okla.), today called on Congress to continue providing a 16 percent funding increase to Medicaid's Low Disproportionate Share Hospital (DSH) states for FY 2009. Without Congressional intervention, these 16 percent annual funding increases will expire on September 30, 2008. Senator Inhofe is leading a bipartisan effort with Senator Bingaman (D-NM) in the Senate to ensure Congress acts by the deadline. Currently, Senators Inhofe and Bingaman are working on a letter to their colleagues urging quick action.

"It is vital to Oklahoma that Congress acts before it recesses to provide the 16 percent funding increase for Medicaid's Low Disproportionate Share Hospital (DSH) states for FY 2009," Senator Inhofe said.  "Without Congressional intervention, these funding increases will expire on September 30, 2008. With the deadline quickly approaching, I will be working closely with Senator Bingaman to ensure we get these increases extended.

"The DSH payments help to reduce the financial burden and decrease uncompensated care costs on our states, hospitals and facilities providing health care services to the indigent and uninsured.  Congress created the Medicaid DSH payment in 1981 to ensure that state Medicaid programs provide adequate payments to hospitals whose patient populations are disproportionately composed of low income Medicaid and uninsured patients.  Medicaid DSH payments have evolved into one of the most important sources of financing for the nation's health care safety net."

Background:

Under current law, DSH payments are subject to a series of caps, both on the amount of DSH money an individual hospital can receive (hospital-specific DSH caps) as well as on the total amount of DSH payments within a state (state DSH allotments).  The amount of the state-by-state allotments was established in 1991 based on the size of a state's DSH program at that time.  While some states had fairly robust programs in 1991 and therefore have fairly generous caps, many states were left with very low DSH caps. 

In 2003, Congress passed the Medicare Modernization Act (MMA).  The MMA statutorily defined Low DSH states as those states where DSH expenditures are less than 3 percent of total Medicaid expenditures as of FY 2000.  They provided these states with a 16 percent annual funding increase to their DSH allotments through FY 2008.  After FY 2008, low DSH states will only receive limited consumer price index inflation adjustments, so if the definition is extended through 2005, the following states will continue to receive the 16 percent increase until DSH payments are equalized throughout the country: Oklahoma, Alaska, Idaho, Montana, Oregon, Arizona, Iowa, Nebraska, South Dakota, Arkansas, Maine, New Mexico, Utah, Delaware, Maryland, North Dakota, Wisconsin, Florida, Minnesota, and Wyoming.

###