Issue Brief 11-01
January 4, 2011

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) increased ceilings for disproportionate share hospital (DSH) payments in federal fiscal years (FYs) 2009-2010. Specifically, the law increased FY 2009 ceilings by 2.5%. FY 2010 ceilings were increased by 2.5% over the new FY 2009 levels, but only for states whose ceilings would grow more slowly than 2.5%. The ARRA provisions expired on September 30, 2010, and do not apply to the FY 2011 ceilings. As a result, most states will experience a reduction in their DSH allotments in FY 2011.

On January 3, 2011, the Centers for Medicare and Medicaid Services (CMS) published a notice in the Federal Register that provides final FY 2009 DSH allotments, which reflect the ARRA provisions and are identical to the preliminary allotments, and preliminary FY 2011 DSH ceilings. The release includes separate limits for DSH payments to institutions for mental disease (IMDs) and other mental health facilities. Preliminary FY 2010 ceilings, including limits for IMDs, remain the same as those published in an April 23, 2010, notice (see Issue Brief 10-19).