CHA News Article

DHCS to Reduce Disproportionate Share Hospital Payments
For CEOs, CFOs

The Department of Health Care Services (DHCS) has announced it will reduce disproportionate share hospital (DSH) funding, which has been delayed since the implementation of the Affordable Care Act. DSH cuts are currently scheduled to take effect for federal fiscal year (FFY) 2020 after May 23.

The reduction in DSH payments affects private inpatient hospitals, non-designated public hospitals, and designated public hospitals (University of California and county hospitals participating in the Global Payment Program). DHCS has issued a fact sheet with more details on reduction totals by year and type of hospital.

DHCS has stated that it believes continuation of unreduced DSH payments will result in overpayments to hospitals. To minimize recoupment activity, DHCS will:

  • Pay private hospitals up to their post-reduction allocations in the February-March payment, tentatively occurring in April. Assuming the DSH reduction is not further delayed by Congress, no additional DSH payments will be made until data are final later this year. At that time, any necessary payments and/or recoupments will take place. If the FFY 2020 DSH reduction is eliminated by legislative action, any withheld funds will be rolled into the April-May payment, which occurs in June.  
  • Reduce UC third quarter certified public expenditure (CPE)-funded federal financial participation (FFP) payments to an amount not to exceed the hospitals’ reduced CPE allocation. If the FFY 2020 DSH reduction is eliminated by legislative action, DHCS will roll any withheld funds into the fourth quarter payment, tentatively occurring in August. This will not impact intergovernmental transfer and FFP payment.

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