Medicaid Disproportionate Share Hospital Payment Cuts

All states' federal Medicaid DSH allotments were scheduled to be reduced by $4 billion in federal fiscal year 2020, with cuts increasing to $8 billion a year in fiscal years 2021 to 2025.

In March, however, the U.S. Congress passed the Coronavirus Aid, Relief and Economic Security Act, which eliminates the FFY 2020 cut and delays implementation of the FFY 2021 cut until Dec. 12. 

Texas hospitals are encouraged to urge their members of Congress to eliminate the $4 billion in Medicaid DSH cuts for FFY 2021.  Find out who represents you here

The Medicaid and CHIP Payment Access Commission estimates the reduction will be $400.5 million, or 21.4% of DSH payments, in 2021. 

In September 2019, the Centers for Medicare & Medicaid Services published a final rule describing its methodology for distributing the federal DSH allotment reductions. CMS will calculate individual states’ DSH reductions using each respective year’s preliminary DSH allotment as currently calculated under statue.


John Hawkins, senior vice president of government relations, 512/465-1505

Jennifer Banda, J.D., vice president of advocacy, public policy & political strategy, 512/465-1046

Fact Sheet: Importance of Medicaid DSH for Texas (10/27/20) | AHA

Fact Sheet: Medicaid DSH Program (10/27/20) | AHA

thumbnail of joint association letter to DSH
Joint-Association Letter Urging Texas Congressional Delegation to Address Medicaid DSH Cuts (10/23/19)

Letter to DSH
Bipartisan DSH Letter from 29 Texas Congressional Delegation Members to U.S. House Leadership (May 2019)