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June 08, 2009


WASHINGTON, DC - U.S. Senator Jim Inhofe (R-Okla.) today expressed concern regarding the continued inaction on the part of Congress to address the critical funding issues that plague hospitals across the country. Last year, Congress failed to act before an October 1 deadline to continue a 16 percent funding increase to Medicaid's Low Disproportionate Share Hospital (DSH) states for FY 2009.

Last week, Senator Inhofe joined his colleagues in the Senate and the House to send a letter to the legislators crafting health care reform legislation encouraging them to include relief for low-DSH states in the reform legislation. The funding will help reduce the financial burden and decrease uncompensated health care costs for state hospitals and facilities providing health care services to the indigent and uninsured.

"It is vital to Oklahoma that Congress reinstate the 16 percent funding increase for Medicaid's Low Disproportionate Share Hospital (DSH) states," Senator Inhofe said. 

"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."

Mike Fogarty, CEO of the Oklahoma Health Care Authority said, "The DSH program is critically important in supporting Oklahoma's safety net hospitals that care for a disproportional share of patients without insurance. We are very appreciative of the Oklahoma delegation's leadership in this effort as well as support from the other states facing similar crises."

Those joining Senator Inhofe in sending the letter include Senators Bingaman, Udall, Pryor, Bennett, Lincoln, Tester, and Begich along with Representatives Sullivan, Boren, Fallin, Boozman, Cole, Heinrich, Giffords, Lucas, Michaud, Boswell, Moran, Kirkpatrick, Moore, Teague, Young and Schrader.


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 a fairly arbitrary manner as a function of the size of a states' DSH program in 1991, the year the original DSH caps were determined. While some states had fairly robust programs in 1991, and therefore have fairly generous cap, many states were left with low DSH caps.

In 2003, Congress passed the Medicare Modernization Act (MMA).  The MMA statutorily defined Low DSH states with 16 percent annual funding increases to their DSH allotments through FY 2008.  After FY 2008, low DSH states will only receive limited consumer price index inflation adjustments.  The MMA defined low DSH states as those states where DSH expenditures are less than 3 percent of total Medicaid expenditures as of FY 2000.  If the definition of low DSH states is updated through FY 2006, excluding those states that are expending their DSH funds through waivers adopted after passage of the MMA, the following states will continue to receive 16 percent funding increases through FY 2014:  Alaska, Arizona, Arkansas, Delaware, Florida, Idaho, Iowa, Kansas, Maine, Maryland, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Wisconsin, and Wyoming. 

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