The SAFE Hospitals Act changes how states pay hospitals that serve a lot of low-income patients through Medicaid. These hospitals, called disproportionate share hospitals (DSHs), currently get extra Medicaid payments to help cover the costs of treating uninsured and underinsured people. This bill requires states to create a fairer payment system based on how much Medicaid business each hospital does and how many low-income patients they treat.

The bill also changes how money gets divided between states. Instead of using the same formula for all states, it now factors in each state's poverty rate—meaning states with more low-income residents would get a larger share of the available DSH funding. This new approach would be phased in gradually over 10 to 15 years so hospitals have time to adjust to the changes.

In practical terms, this affects hospitals that serve poor communities and the states that fund them through Medicaid. Some hospitals might see their payments increase or decrease depending on their patient mix and their state's poverty level, but the changes happen slowly over more than a decade so there's time to adapt.

SAFE Hospitals Act of 2023

Rubio, Marco

State Accountability, Flexibility, and Equity for Hospitals Act of 2023 or the SAFE Hospitals Act of 2023 This bill alters Medicaid requirements relating to payment for inpatient hospital services that are provided by disproportionate share hospitals (DSHs). (DSHs are hospitals that receive additional payment under Medicaid for treating a large share of low-income patients.) Among other changes, the bill requires state Medicaid programs to adopt a payment methodology that meets certain criteria, including by prioritizing payments based on the DSH tier for which the hospital qualifies; tiers are determined based on factors such as the hospital's Medicaid inpatient utilization rate. The bill also incorporates state poverty ratios (i.e., the number of qualifying low-income individuals in a state compared to all states) into the formula for determining state DSH allotments under Medicaid. The bill phases in application of the revised formula over the course of 10 to 15 years.