Additionally, because Medicaid eligibility and coverage vary widely across states, Medicare DSH payments are distributed unevenly across geographic areas: the Middle Atlantic, South Atlantic, and Pacific regions account for 60 percent of all DSH payments but only 46 percent of Medicare discharges.
The index, whose definition has not changed since the original legislation, is the sum of two ratios: the proportion of all Medicare days that are attributable to beneficiaries of Supplemental Security Income, a means-tested cash benefit program for aged and disabled people, and the proportion of all patient days for which Medicaid is the primary payer.
[7] With the DSH system effectively serving as a money pump that pulled federal funds into state coffers, the program experienced rapid growth.
(2) Total DSH payments to a single hospital could not exceed the unreimbursed costs of providing inpatient care to Medicaid and uninsured patients.
(3) DSH payments made on behalf of Medicaid clients in managed care must be paid directly to hospitals rather than plans.
[10] Despite efforts, recycling persisted until the Centers for Medicare and Medicaid Services (CMS) began examining the practice on a state-by-state basis.