How to Calculate Operating DSH (Disproportionate Share Hospital)

How to calculate the operating DSH adjustment

One area that sometimes confuses providers is the operating DSH calculation. We know operating DSH is important due to the DRG calculation.

When does the DSH adjustment apply?

1. Urban hospitals with 100+ beds.
2. Rural hospitals with 500+ beds.
3. Rural hospitals that are Rural Referral Centers (RRCs) and Sole Community Hospitals (SCH).

What elements do I need to know?

The operating DSH factor is comprised of the (1) SSI score and (2) the Medicaid score.

“The DSH formula is composed of the sum of two fractions. Both fractions are designed to count the number of low-income patients served by a hospital, but each fraction counts a different group of those patients” Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984 (4th Cir. 1996). The DSH formula is sometimes also referred to as the Disproportionate Patient Percentage (DPP).

The SSI score, sometimes referred to as the Medicare fraction or proxy, is comprised of the percentage of Medicare Part A + Medicare Part C days where the patient had both Medicare Part A and was a recipient of SSI.

The Medicaid score is comprised of the percentage of Total Inpatient Days where patients were eligible for Medicaid, not entitled to Medicare Part A.

The distinction between entitled and eligible matters. For a detailed discussion, see Cabell Huntington Hosp., Inc. v. Shalala.

That the terms "eligible" and "entitled" are not interchangeable becomes eminently clear with everyday examples of the words' common meanings. In a football game, wide receivers are eligible to receive the ball from the quarterback, but none of them is entitled to receive it.

What is the basic calculation?

Urban Hospitals with 100+ beds and Rural Hospitals with 500+ beds are paid under under the following scheme:

1. On the first 15% of DPP: 2.50% DSH Bonus
2. On the next 5.2% of DPP: 3.38% DSH Bonus
3. Above 20.2% DPP, you get a bonus of 82.5% of the difference.

For a hospital with a DPP of 25%, you would calculate the DSH operating percentage as:

1. 2.50% DSH Bonus (for the 15% of DPP)
2. 3.38% DSH Bonus (for the next 5.2% of DPP)
3. 3.96% DSH Bonus (for the next 4.8 of DPP, multiplied by 0.825)

Total: 9.84%

The Calculation takes place on E, Part A. Please note that the line number for 2552-10 have changed.

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E, Part A lines 4-4.04