HB6393 would amend the Social Security Act to provide a permanent disproportionate share hospital (DSH) allotment for Tennessee beginning in fiscal year 2026. The 2026 allotment is set to equal Tennessee’s 2015 DSH allotment under paragraph 6(A)(vi), increased each year by the change in the consumer price index for all urban consumers.
Beginning in fiscal year 2027, Tennessee would be treated as a low DSH state, with its allotment increased in the same manner as other low DSH states under the relevant provisions. The bill also designates Tennessee’s DSH restoration as permanent, removing the need for annual reauthorization and adjusting the framework for future years through a CPI-based growth mechanism.
At a Glance
What It Does
Creates a new subparagraph (G) in section 1923(f)(3) to establish a permanent Tennessee DSH restoration beginning 2026 and to treat Tennessee as a low DSH state in subsequent years, with increases tied to CPI.
Who It Affects
DSH-eligible hospitals in Tennessee, Tennessee’s TennCare program administrators, and hospitals that rely on DSH funding to support Medicaid and uninsured patients.
Why It Matters
Provides a stable, inflation-protected funding stream for Tennessee hospitals and sets a precedent for state-specific DSH restoration that could affect federal-state budgeting and inter-state equity within the DSH program.
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What This Bill Actually Does
The bill makes a targeted adjustment to the federal DSH program by creating a dedicated restoration for Tennessee and embedding it into the Social Security Act. It adds a new provision that guarantees Tennessee a DSH allotment starting in FY2026, then establishes a long-term framework beyond that year.
The 2026 allotment is pegged to Tennessee’s 2015 level under a previous provision, with annual increases tied to CPI growth. From FY2027 onward, Tennessee would be considered a low DSH state, and its allotment would rise using the same schedule used for other low DSH states.
In short, Tennessee would receive a permanent, inflation-adjusted DSH funding stream, with a transition into a standardized low DSH escalation path after 2026. The overarching aim is to shield Tennessee hospitals, especially those serving Medicaid and uninsured patients, from funding shortfalls while maintaining the existing federal-state structure of the DSH program.
The amendment formalizes the restoration and sets the terms for how increases will be calculated, reducing the likelihood of future annual policy renegotiations around Tennessee’s DSH support. Implementation relies on modifying existing paragraphs and inserting the new subparagraph (G) to codify the Tennessee-specific pathway within the broader DSH framework.
The Five Things You Need to Know
The bill adds a new subparagraph (G) to Section 1923(f)(3) to establish Tennessee’s DSH restoration.
For FY2026, Tennessee’s DSH allotment equals its FY2015 level under paragraph 6(A)(vi), adjusted annually by CPI.
Starting in FY2027, Tennessee is treated as a low DSH state, with increases mirroring those for other low DSH states.
The Tennessee restoration is made permanent, not contingent on future reauthorizations.
All increases use CPI adjustments—linking DSH funding to inflation.
Section-by-Section Breakdown
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Short Title and Citation
This section amends the bill’s designation, naming the act as the Delivering Support for Hospitals in Tennessee Act (DSH in Tennessee Act). It establishes the formal identifiers and sets the scope for the new Tennessee-specific DSH restoration within the federal statute.
Permanent Tennessee DSH Allotment
This section amends Section 1923(f)(3) to add a new subparagraph (G). It creates a permanent Tennessee DSH restoration beginning in FY2026, sets the FY2026 allotment equal to the state’s 2015 DSH allotment (per paragraph 6(A)(vi)), and requires annual increases tied to the CPI. Starting in FY2027, Tennessee will be treated as a low DSH state, with the DSH allotment increased in the same manner as for other low DSH states.
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Who Benefits
- DSH-eligible hospitals across Tennessee, which receive a stable, inflation-adjusted funding stream to support Medicaid and uninsured patient care.
- TennCare (Tennessee’s Medicaid program) administrators, who will implement and manage the dedicated DSH funding.
- Tennessee Hospital Association and hospital systems that rely on DSH for uncompensated care and Medicaid shortfalls.
- Patients in Tennessee who rely on hospital services funded in part by DSH dollars, particularly those insured by Medicaid or lacking insurance.
Who Bears the Cost
- The federal government (CMS), which funds DSH payments, bears the incremental costs of the permanent augmentation for Tennessee.
- Other states’ DSH funding dynamics could shift as funds and policy attention adjust within the overall DSH program.
- Hospitals outside Tennessee do not receive this Tennessee-specific DSH funding, which may affect perceived equity within the nationwide DSH program.
- Any long-term administrative costs to CMS or state agencies arising from implementing the new permanent framework.
Key Issues
The Core Tension
Balancing targeted, permanent relief for Tennessee’s hospitals against broader national equity and fiscal flexibility within the DSH program: should one state's stabilized, inflation-protected funding anchor a policy that otherwise relies on dynamic, multi-state allocations?
The bill introduces a state-specific expansion within a broader federal program, raising questions about equity and sustainability. By locking in a permanent Tennessee DSH restoration with CPI-indexed growth, the policy reduces the likelihood of future reauthorizations or adjustments to Tennessee’s DSH funding, potentially constraining adjustments needed if Tennessee’s Medicaid landscape or hospital mix changes.
The move could also influence how much funding remains available to other states under the DSH program, given the fixed federal budget envelope. Administrators will need to monitor inflation adjustments and the administrative workload of applying the CPI-based increases year after year, especially as the low DSH state category is invoked after 2026.
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