The Centers for Medicare & Medicaid Services today issued a proposed rule intended to increase oversight and transparency in Medicaid supplemental payment programs, including Disproportionate Share Hospital payments, and how states finance these programs.
 
The proposed rule would require states to report provider-specific information on non-DSH supplemental payments received for services in the state’s plan amendment or through demonstration programs and the source of the non-federal funding for those payments. CMS proposes to sunset supplemental payment methodologies after three years, requiring states to seek future approval and adhere to standardized templates and calculations for non-DSH supplemental payments. In addition, the rule proposes to establish new regulatory definitions for Medicaid “base” and “supplemental” payments, and clarify definitions for non-federal share financing arrangements and upper payment limit ownership categories. 
 
The rule also would clarify how public funds can be used in state financing arrangements, clarify impermissible donations, and prohibit imposing higher provider tax rates on Medicaid services. Among other proposals, the rule would quantify individual DSH audit findings by hospital, and clarify the procedures for when DSH overpayments are discovered and the process for redistributing the overpayment. CMS will accept comments on the rule for 60 days after its publication in the Federal Register.

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