The Future of Medicaid Supplemental Payments: Can They Promote Patient-Centered Care?

Supplemental Medicaid payments such as DSH and UPL are the exception to the financing of specific services to specific patients. Medicaid DSH funds currently finance over 30 percent of hospital care to the uninsured. As a result of the Affordable Care Act (ACA), DSH funds will be substantially reduced. At the same time, their importance will be heightened, especially in states that refuse to take up the ACA’s Medicaid expansion. DSH payments to hospitals have been plagued by a lack of accountability and transparency and an inability to assess whether patients benefit from such payments. Flexibility in the DSH program through federal waivers has allowed states and regions to implement programs that provide coverage or care to low income people. We propose that any use of Medicaid supplemental payments can be assessed based on the extent to which the funds promote patient-centered care -- care, as defined by the IOM, that is respectful of and responsive to individual patient preferences, needs, and values. By examining four programs partially funded by DSH payments in Iowa, Indiana, Massachusetts, and California, initial insights about the characteristics of programs that help promote patient-centered care to a greater or lesser degree are discussed. We assess, within the confines of the available data, whether each program is appropriately targeted toward low income patients, whether patient-centered attributes of care such as treating each patient as a whole person and with respect, dignity, and transparency has been achieved and whether the programs encourage the active engagement of patients in care processes through shared power to influence such processes