Updating and reforming prospective payment for hospital inpatient care (D)

For Medicare’s disproportionate share payments: Through a minimum threshold for low-income share, the formula for distributing disproportionate share payments should concentrate payments among hospitals with the highest shares of poor patients. A reasonable range for this threshold would be levels that make between 50 percent and 60 percent of hospitals eligible for a payment. The size of the payment adjustment, however, should increase gradually from zero at the threshold. The same distribution formula should apply to all hospitals covered by prospective payment.