Save Our Safety-Net Hospitals Act of 2025
The Save Our Safety-Net Hospitals Act of 2025 would reform how Medicaid disproportionate share hospital (DSH) payments are calculated and distributed. It expands what counts as a DSH payment by including payments made by Medicare (title XVIII) or by certain applicable plans for services, and it adds a new condition tying those payments to the hospital’s overall costs. This aims to better reflect hospitals’ actual expenditures for care provided to low-income or uninsured patients. In addition, the bill creates a state option to reallocate unspent federal DSH allotments from prior years to increase hospital payment adjustments for rate years beginning after October 1, 2021, up to a modified cap. States could retroactively modify their Medicaid state plans or waivers to implement these increases, provided the changes stay within the DSH allotment cap and meet several reporting and audit-related deadlines. The bill would apply to rate years beginning on or after enactment and would require ongoing reporting of any increased payments.
Key Points
- 1Expands DSH payment definitions: Includes payments for services made under Medicare (title XVIII) or by an applicable plan in determining DSH adjustments, with conditions tied to hospital costs for the services.
- 2Targeted beneficiary payer inclusion: Adds a new subparagraph clarifying that DSH considerations can apply to individuals eligible for medical assistance (Medicaid) under the state plan or waivers, but only if the hospital’s aggregate costs exceed the payments from those payors for the year.
- 3State flexibility to use unspent DSH funds: States may use unspent federal DSH allotments from prior years (for rate years beginning after 2021 but before enactment) to increase hospital DSH payments, within the overall state DSH allotment cap and the amended statutory framework.
- 4No recoupment of prior payments: States may not recoup increased DSH payments already made to hospitals if those payments conform to the amended law.
- 5Retroactive state plan amendments and reporting: States can retroactively modify Medicaid state plans, waivers, or plan amendments to allow increased payments under this new authority, subject to timing and audit constraints; states must report these changes in the next annual 1923(j)(1) report.
- 6Effective date and scope: The amendments apply to Medicaid payment adjustments for rate years beginning on or after the date of enactment, with the state option described above applying under specified conditions.