How does the DSH (Disproportionate Share Hospital) adjustment affect IPPS payments?

• A. DSH adjustment reduces payments to hospitals with high shares of privately insured patients.
• B. DSH adjustment applies only to rural hospitals.
• C. DSH adjustment cuts costs for emergency departments.
• D. It provides additional payments to hospitals serving a large share of low-income and uninsured patients.

Answer: (D)

DSH adjustments are additional payments built into the IPPS system to offset the higher costs and greater burden of care for hospitals that treat many low-income and uninsured patients. When a hospital serves a large share of these patients, it qualifies for a larger DSH payment, which is added to its standard IPPS reimbursement. This helps offset uncompensated care and the extra resources those hospitals need. It’s not about reducing payments to hospitals with more privately insured patients, it’s not limited to rural hospitals, and it doesn’t reduce costs for emergency departments.