Disproportionate Share Hospital (DSH) adjustment payments provide additional help to those hospitals that serve a significantly disproportionate number of low-income patients; eligible hospitals are referred to as DSH hospitals. States receive an annual DSH allotment to cover the costs of DSH hospitals that provide care to low-income patients that are not paid by other payers, such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) or other health insurance. This annual allotment is calculated by law and includes requirements to ensure that the DSH payments to individual DSH hospitals are not higher than these actual uncompensated costs. For further details see http://www.hhs.gov/recovery/cms/dsh.html.

The United States Department of Health and Human Services, available at http://www.hhs.gov/recovery/cms/dsh.html, March 20, 2009.

Federal Fiscal Year: Unless otherwise noted, years proceeded by "FY" on statehealthfacts.org refer to the Federal Fiscal Year, which runs from October 1 through September 30. For example, FY 2009 refers to the period from October 1, 2008 through September 30, 2009.

1. These states are considered "Low DSH States." The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173) included special provisions in Title X, Section 1001 for the 16 states with DSH expenditures between 0% and 3% of total (state and federal) Medicaid spending in FY 2000, defined as low DSH states. The allotment for these states increases by 16% each year from FY 2004 through FY 2008, and by the CPI-U thereafter.
2. Hawaii and Tennessee DSH allotments are determined under the authority of section 1923(f)(6) of the Act; that section provides for a separate determination of allotments for such states and the 2.5% increase in DSH allotments available to other States under ARRA is not available for determining the DSH allotments for HI and TN. Section 616 of CHIPRA extended HI's and TN's DSH allotments through December 31, 2011. Finally, under section 1923(f)(6) of the Act, TN's DSH payments for a fiscal year are limited to 30% of the DSH allotment, and furthermore, the sum of TN's DSH paymens and Essential Access Hospital supplemental pool payments under its TennCare Demonstratoin, shall not exceed the DSH allotment for the fiscal year.