Medicaid is jointly financed by the federal and state governments, but each state designs and administers its own state program under broad federal guidelines. Accordingly, state variation in eligibility, covered services, and the delivery of, and reimbursement for, services is the rule rather than the exception. How is Congress to respond to the numerous proposals to move Medicaid forward into the near and long term? This report lays out some of these issues, explains the factors underlying them, and provides links to CRS products that can help Members of Congress and their staff prepare to discuss Medicaid’s role today and into the future.
The Medicaid statute requires that states make disproportionate share (DSH) adjustments to the payment rates of certain hospitals treating large numbers of low-income and Medicaid patients — recognizing the disadvantaged situation of those hospitals. Although the requirement was established in 1981, DSH payments did not become a significant part of the program until after 1989 when they grew from just under $1 billion to almost $17 billion by 1992. During that time states’ Medicaid budgets were facing a number of upward pressures while states were learning about financing techniques that made it easier to collect increased DSH payments from the federal government.
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