Tenn. seeks permission to change Dsh-fund allocations

Tennessee plans to seek federal permission to change how it doles out uncompensated-care funds to hospitals.

The state wants to change how Medicaid disproportionate share hospital funds, which cover unpaid bills at hospitals with high amounts of Medicaid patients, are distributed.

Currently, each eligible hospital receives a set amount of DSH money. If they have been overpaid, the state recovers the excess DSH money and redistributes it to other hospitals within the same DSH funding group. These categories include essential-service safety net hospitals, children’s safety net hospitals, and free-standing psychiatric hospitals. The state plan amendment would allow recovered funds to be redistributed to any DSH-eligible hospital. Tennessee receives $53 million in Medicaid DSH funds annually.

Patient revenue hasn’t covered total hospital expenses in the state since 2010, according to the Tennessee Hospital Association. In 2014, expenses were $240 million more than patient revenue, according to THA’s most recent figures. The association supports the proposed change and plans to work with the state to implement it. Chattanoogabased Erlanger Health System, which operates seven hospitals, also praised the move as it gives the state more flexibility in handling the distribution of funds.