Issue Brief 12-30
July 27, 2012

On July 24, 2012, the Centers for Medicare and Medicaid Services (CMS) published a notice in the Federal Register that provides final fiscal years (FYs) 2010 and 2011 disproportionate share hospital (DSH) allotments, and preliminary FY 2012 DSH ceilings. The release includes separate limits for DSH payments to institutions for mental disease (IMDs) and other mental health facilities.

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) increased ceilings for DSH payments in 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 such, most states saw a reduction in their DSH allotments in FY 2011. Based on preliminary figures, almost all states will see a slight increase in their DSH allotments in FY 2012. Beginning in FY 2014, however, DSH payments are dramatically reduced as part of health care reform.