Disproportionate Share Hospital (DSH) payment
A DSH payment is a Medicare add-on to inpatient hospital payment for hospitals that treat a disproportionately large share of low-income patients.
Updated
A Disproportionate Share Hospital (DSH) payment is an additional Medicare payment, layered on top of the inpatient prospective payment system's per-discharge rate, paid to hospitals that serve a disproportionately large share of low-income patients. A hospital qualifies for a DSH adjustment when its patient share from low-income programs (such as Medicaid and Medicare Supplemental Security Income) crosses a defined statutory threshold, and the size of the adjustment scales with that share.
DSH exists because hospitals that care for a high proportion of low-income patients face cost pressures that a flat per-discharge rate does not reflect. The adjustment is computed from the hospital's case mix and patient-share data, and the rules and thresholds have been revised over time, including through Medicaid DSH changes.
In practice
DSH is a hospital cost-report–driven adjustment rather than something a per-claim biller sets. It is reconciled from the hospital's cost report and patient-share data, so its financial impact is realized at settlement rather than on the individual claim, and the eligibility rules change periodically — making accurate low-income-patient share reporting material to the payment.
Commonly confused with
- MS-DRG: The MS-DRG is the base per-discharge payment group; the DSH payment is an add-on percentage layered on top of that base for qualifying hospitals. A DSH adjustment never replaces the MS-DRG payment.