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ASHP Requests Waiver of the Medicare Disproportionate Share Hospital (DSH) Program Adjustment Percentage Requirement

Secretary Azar

April 1, 2020

The Honorable Alex Azar
U.S. Department of Health and Human Services
Hubert H. Humphrey Building
200 Independence Avenue, SW
Washington, DC 20201


Dear Secretary Azar:


As COVID-19 continues to spread, our healthcare system is becoming strained and will struggle to provide adequate care to patients. Hospitals are being asked to do all they can to help curb the outbreak and treat all patients that are in need. Because the COVID-19 public health emergency will likely have a significant impact on hospital admissions and payer mix, there is concern that such changes could impact hospital eligibility for the 340B program. Losing 340B eligibility would materially damage the ability of these hospitals to meet patient needs. To protect patient access to high-quality care, ASHP urges you to waive the Medicare Disproportionate Share Hospital (DSH) program adjustment percentage requirement for the duration of the COVID-19 public health emergency.

ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings. The organization’s nearly 55,000 members include pharmacists, student pharmacists, and pharmacy technicians. For more than 75 years, ASHP has been at the forefront of efforts to improve medication use and enhance patient safety.

As CMS is aware, hospitals are temporarily increasing their inpatient bed capacity by 50% or more to address the anticipated surge of admissions during the COVID-19 crisis. In addition, hospitals may experience temporary changes in their payer mix if they see an influx of admissions for non-Medicaid or non-Medicare/SSI beneficiaries. Because DSH adjustment percentage is a product of Medicaid inpatient days and Medicare/ Supplemental Security Income (SSI) inpatient days, the shifting patient mix could temporarily reduce the DSH percentage, even though the hospital’s main patient base remains unchanged. During the COVID-19 outbreak, hospitals may also shift care to the outpatient setting, in an effort to conserve inpatient space and keep well patients out of the hospitals. These changes could also affect inpatient payor mix.

Hospitals’ COVID-19 response efforts, with their attendant admissions and payor mix changes, should not be reflected in a hospital’s DSH adjustment percentage. Reducing DSH percentage based on time-limited emergency measure unfairly penalizes hospitals and affects their ability to access 340B pricing. Given the uncertain nature of admission rates and payer mix over the course of the COVID-19 crisis, we believe that no DSH adjustment percentage should be made during the public health emergency. This will ensure that hospitals and their patients do not lose access to the 340B program just when they can least afford it.

We urge you to waive the Medicare Disproportionate Share Hospital (DSH) program adjustment percentage adjustments for the duration of the public health emergency, so that hospitals are not penalized for being on the frontlines of COVID-19 response.

If you have any questions, please feel free to reach out to Jillanne Schulte Wall, Senior Director of Health & Regulatory Affairs, at [email protected] .



Tom Kraus
Vice President, Government Relations


Vice President Mike Pence
Administrator Seema Verma, Centers for Medicare & Medicaid Services
RADM Krista Pedley, Health Resources & Services Administration