Medicare Disproportionate Share Adjustment Reimbursement

What are Medicare Disproportionate Share (DSH) Payments?

Medicare Disproportionate Share (DSH) payments intend to compensate hospitals for the increased costs of treating a disproportionately large number of indigent patients. DSH payments are critically important to qualifying hospitals’ financial health, representing a significant total of Medicare payments for qualifying hospitals.

Recent changes to the Medicare Inpatient Prospective Payment System (IPPS) have increased the DSH calculation complexity. Hospitals must first meet the statutorily defined Disproportionate Patient Percentage (DPP) threshold before determining potential eligibility for the alternate special exemption methodology.

Medicare Disproportionate Patient Percentage (DPP)

The Disproportionate Patient Percentage (DPP) is equal to the sum of the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Security Income (SSI), and the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A.

The Disproportionate Patient Percentage is the result of the following calculation:

DSH Patient Percent = (Medicare SSI Days / Total Medicare Days) + (Medicaid, Non-Medicare Days / Total Patient Days)

Understanding Alternate Special Exemption Methodology

The alternate special exemption methodology is for large (>100 beds) urban hospitals that can demonstrate more than 30 percent of their total net inpatient care revenues come from State and local governments for indigent care (other than Medicare or Medicaid).

The alternate special exemption calculation includes hospital patient days used by patients who, for those days, were eligible for medical assistance under a state plan approved under title XIX (Medicaid), but who were not entitled to Medicare Part A. This number is divided by the total number of hospital patient days for that same period.

Hospitals whose primary DSH patient percentage exceeds 15 percent and whose alternate special exemption exceeds 30%, are eligible for the maximum DSH payment adjustment.

Why Choosing a DSH Partner is Essential?

The team at Healthcare Reimbursement Solutions has created a detailed process to analyze 100% of the hospital inpatient discharges for each Medicare cost reporting period. HRS will determine eligibility for DSH in strict compliance with past and present Medicare DSH regulations. Each patient’s stay will be reviewed for Medicare eligibility, and Medicaid paid claims status or Medicaid eligibility. HRS’s process will rigorously match mothers to newborns and provide a labor and delivery room analysis. HRS will work closely with your Medicare Authorized Contractor (MAC) during the cost report filings, re-openings, appeals, and audits of the DSH Listings.

Benefits of Choosing HRS:

DSH Reimbursement

  • HRS staff and consultants have a track record of success, having recovered more than $1B in additional DSH Reimbursement from Medicare Part A.
  • HRS has first-time qualified hospitals for DSH by crossing the 15% statutory threshold.
  • HRS provides a detailed inpatient discharges analysis, reconciling potential DSH patients to their eligible and paid programs.
  • HRS is experienced with complex regulations and keep clients informed of changes that impact their DSH Reimbursement.
  • HRS has access to the best data sources to determine Medicaid eligible and paid days are more important than ever for future DSH Reimbursement

Medicare Adds New Documentation Requirements for DSH Eligible Hospitals

The Medicare IPPS final rule made additional changes to the supporting documentation requirements for Medicare cost reports beginning on or after September 1, 2018. Failure to include detailed listings of eligible Medicaid days along with charity care and uninsured discounts claimed on cost reports results in a rejected submission due to a lack of supporting documentation.

  1. Disproportionate Share Hospital (DSH) Eligible Hospitals (Section 413.24(f)(5)(i)(C)) – For hospitals claiming a DSH payment adjustment, a cost report will be rejected for lack of supporting documentation if it does not include a detailed listing of the hospital’s Medicaid-eligible days that corresponds to the Medicaid-eligible days claimed in the hospital’s cost report. Also, if the hospital submits an amended cost report that changes its Medicaid-eligible days, the hospital must submit an amended listing or an addendum to the original listing of the hospital’s Medicare-eligible days that corresponds to the Medicaid-eligible days claimed in the hospital’s amended cost report.
  2. Charity Care and Uninsured Discounts (Section 413.24(f)(5)(i)(D)) – For DSH-eligible hospitals reporting charity care and/or uninsured discounts, a cost report will be rejected for lack of supporting documentation if it does not include a detailed listing of charity care and/or uninsured discounts that correspond to the amounts claimed in the DSH-eligible hospital’s cost report. Also, until a standard format is adopted, a hospital must submit charity care and/or uninsured discount list with its cost report that supports the amounts reported in its cost report including information such as patient name, dates of service, the insurer (if applicable), and the amount of the charity care and/or uninsured discount given to the patient.