Major Changes to Hospital Funding: Prioritizing Care for Low-Income Patients.
This law fundamentally changes how federal funds are distributed to hospitals that treat a high number of low-income and uninsured patients (Medicaid DSH payments). Starting in 2026, state funding allocations will be based primarily on the state's poverty level, aiming to direct more resources where the need is greatest. It also requires states to prioritize payments to hospitals based on how many Medicaid and low-income patients they serve, ensuring critical safety-net hospitals receive necessary financial support.
Key points
New funding formula starting in 2026: Federal hospital funds will be allocated to states based on their poverty rate, replacing the current system.
Hospitals are tiered (Tier 1 to 4) based on their volume of low-income patients; Tier 1 hospitals receive the highest priority for payments.
States gain flexibility to save up to 10% of their annual hospital funding to stabilize budgets in future years.
Expired
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