SPONSORED CONTENT
Hospitals that serve a high volume of low-income and uninsured patients rely on Disproportionate Share Hospital (DSH) funding to maintain financial stability. A hospital’s Medicare DSH adjustment percentage is critical for preserving access to the 340B program. As healthcare policy continues to shift and Medicaid funding becomes more uncertain, it’s important for hospitals to proactively manage their DSH percentage. Let’s talk about how a strategic approach to DSH sustainability can help hospitals meet eligibility thresholds and build long-term resilience to industry changes.
Why DSH Matters Now More Than Ever
The most common method for a hospital to qualify for Medicare DSH adjustments is through a formula called the DSH patient percentage. This percentage reflects the hospital’s inpatient Medicaid population and Medicare patients who also receive Supplemental Security Income (SSI). SSI provides monthly payments to people with disabilities and older adults who have little or no income or resources.
Maintaining a DSH percentage that meets the qualifications for 340B eligibility is becoming increasingly difficult. Ongoing and proposed Medicaid cuts reduces the number of patients who qualify for Medicaid and make it harder for hospitals to benefit from DSH funding and 340B eligibility. A hospital’s DSH percentage is a key factor in qualifying for the 340B program. This program offers major savings on outpatient pharmaceuticals and helps fund a wide range of patient care services.
“Everyone should be concerned about how Medicaid changes are going to affect their DSH numbers,” explains Angela De Ianni, Managing Director at Visante. “Knowing your hospital’s Medicaid days are critical to maintaining your DSH eligibility.”
How DSH Impacts Patient Care
For many hospitals, DSH and 340B aren’t just nice-to-haves; without these programs, health systems may be forced to scale back or eliminate offerings, including:
- Behavioral health services that support patients with limited access to outpatient care
- Care coordination programs for complex or high-risk patients
- Specialty pharmacy access for high-cost medications
- Community outreach and preventive care efforts that reduce long-term hospitalizations
- Extended clinic hours or transportation assistance for patients facing logistical barriers
Understanding the DSH Percentage Threshold
340B eligibility varies depending on entity type. Some entities, such as Sole Community Hospitals and Rural Referral Centers, require a DSH adjustment percentage of 8% or greater. Others, such as a DSH Hospital, require a DSH percentage greater than 11.75%. The 11.75% Medicare DSH adjustment percentage is the equivalent of an inpatient patient population of 27.32% Medicaid and SSI patients. The 8% Medicare DSH adjustment percentage is the equivalent of an inpatient population of 22.77% Medicaid and SSI patients.
At Visante, a sustainable DSH percentage is more than a goal, it’s a strategic safety zone. Reaching and maintaining that level helps insulate hospitals from the detriment of external changes.
The Visante Difference: Going Beyond the Basics
Visante views DSH sustainability through a different lens than most traditional consultants in this space. Our review of this effort focuses on the bigger picture: sustaining eligibility, adapting to regulatory changes, and unlocking long-term program value. Our approach is strategic and layered. Meaning, we don’t just analyze where reimbursement can be maximized, we identify gaps, streamline workflows, and implement sustainable strategies that help hospitals improve their DSH percentage and protect their 340B status.
“We are looking at DSH sustainability holistically. What can we do today to impact the current fiscal year and what can we do proactively to change our trajectory long-term?” shares De Ianni.
Our broader view of DSH sustainability includes quick wins to boost performance and long-term initiatives that drive compliance. For us, it’s about building a durable foundation that supports eligibility this year and every year to follow.
Proactive DSH Management is Your Safeguard Against 340B Disruption
Since 340B Drug Pricing Program eligibility is in part tied to maintaining DSH percentage thresholds, small changes can have a big impact. Proactive DSH strategies help health systems:
- Avoid falling below the 340B eligibility threshold
- Offset the impact of state and federal Medicaid cuts that reduce low-income inpatient days
- Protect critical 340B savings that support pharmacy operations and patient care programs
- Sustain access to essential services and medications for underserved patient populations through more stable funding and resource allocation
This Is a C-Suite Conversation
DSH sustainability and 340B eligibility are strategic financial decisions that can impact millions in annual revenue and patient care funding. That’s why this conversation belongs at the executive level. Finance, pharmacy, and compliance leaders need to collaborate.
“The 340B program is extremely important. Many of these services bring in less revenue than traditional hospital care. 340B allows us to expand access while staying financially sustainable,” shares Eric Siegenthaler, Senior Director at Visante.
Visante Transforms Confusion into Clarity: Let’s Talk
DSH optimization is no longer optional, it’s essential. At Visante, we act as your guide in a chaotic marketplace, helping you cut through complexity and move from uncertainty to clarity. Whether you’re trying to stay above your DSH eligibility threshold, climb toward it, or simply understand where you stand, we’re here to help. Contact our team today!
