Did budget cuts in Medicaid disproportionate share hospital payment affect hospital quality of care?

Med Care. 2014 May;52(5):415-21. doi: 10.1097/MLR.0000000000000114.


Background: Medicaid Disproportionate Share Hospital (DSH) payments are one of the major sources of financial support for hospitals providing care to low-income patients. However, Medicaid DSH payments will be redirected from hospitals to subsidize individual health insurance purchase through US national health reform.

Objectives: The purpose of this study is to examine the association between Medicaid DSH payment reductions and nursing-sensitive and birth-related quality of care among Medicaid/uninsured and privately insured patients.

Methods: Economic theory of hospital behavior was used as a conceptual framework, and longitudinal data for California hospitals from 1996 to 2003 were examined. Hospital-fixed effects regression models were estimated. The unit of analysis is at the hospital level, examining 2 aggregated measures based on the payer category of discharged patients (ie, Medicaid/uninsured and privately insured).

Principal findings: The overall study findings provide at best weak evidence of an association between net Medicaid DSH payments and hospital quality of care for either Medicaid/uninsured or the privately insured patients. The magnitudes of the effects are small and only a few have significant DSH effects.

Conclusions: Although this study does not find evidence suggesting that reducing Medicaid DSH payments had a strong negative impact on hospital quality of care for Medicaid/uninsured or privately insured patients, the results are not necessarily predictive of the impact national health care reform will have. Research is necessary to monitor hospital quality of care as this reform is implemented.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Budgets / statistics & numerical data*
  • California
  • Diagnosis-Related Groups
  • Economics, Hospital / statistics & numerical data*
  • Financing, Government / statistics & numerical data
  • Health Services Research
  • Hospital Administration / statistics & numerical data*
  • Hospital Bed Capacity
  • Medicaid / economics*
  • Medically Uninsured / statistics & numerical data
  • Nursing Staff, Hospital / statistics & numerical data
  • Ownership
  • Personnel Staffing and Scheduling / statistics & numerical data
  • Quality Indicators, Health Care
  • Quality of Health Care / economics
  • Quality of Health Care / statistics & numerical data*
  • United States