FFY 2026 IPPS Proposed Rule: Uncompensated Care (UC) DSH

I. FY26 IPPS Proposed Rule Summary

II. ”Unleashing Prosperity through Deregulation of the Medicare Program”

III. National Medicare IPPS Estimates

IV. Provider Rates

V. Uncompensated Care DSH

VI. Wage Index

VII. Graduate Medical Education

VIII. Reminder: Outlier Reconciliation Changes

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CMS proposes to increase Medicare UC DSH payments by $1.5 billion, to $7.2 billion in FFY26.  CMS uses an average of UC Costs from FFY20, FFY21 and FFY22 to determine each DSH hospital’s portion of the fund (i.e., Factor 3).  UC costs from the December 2024 HCRIS update were reported in the Proposed Rule. For the Final Rule, CMS intends to use the March 2025 HCRIS update.

Hospital teams have until Tuesday June 10th to notify CMS of any discrepancies due to Medicare auditor mishandling of UC cost data and/or issues related to UC costs at merged providers. Please see CMS’s file entitled “FY 2026 IPPS Proposed Rule Medicare DSH Supplemental Data File (ZIP):” at the FFY 2026 Proposed Rule Home Page.

DSH providers may contact CMS at Section3133DSH@cms.hhs.gov to request corrections.

Table 3 - Trend of National UC DSH Funding

Toyon’s Take

As providers are refining UC reporting in the Medicare cost report, corrections to prior year UC costs reported on Worksheet S-10 may be discovered.  FFY26 UC DSH reimbursement will use UC Costs from FFYs 20, 21 and 22 (FY22 UC costs are currently under MAC review). Therefore, if corrections related to FFYs 20 and 21 are required, Toyon recommends 1) notifying your MAC as soon as possible; and 2) and amending the respective cost report so that UC costs reported on Worksheet S-10 are corrected in the next HCRIS dataset.

For more information, please contact Fred Fisher at 888.514.9312 or fred.fisher@toyonassociates.com.