The bill restores and indexes DSH funding for Tennessee to stabilize hospital finances and Medicaid access, at the cost of modestly higher federal spending and potential reduced DSH growth for hospitals in other states.
Hospitals in Tennessee and the Medicaid/uninsured patients they serve will have Tennessee's DSH allotment restored starting FY2026, improving hospital financial stability and support for care delivery.
Tennessee's DSH allotment will be indexed to the CPI-U, so funding will grow with inflation and help hospitals maintain purchasing power for supplies and staffing.
Treating Tennessee as a low-DSH State aligns its allotment-growth methodology with other low-DSH States, giving Tennessee and its hospitals more predictable future allotments for budgeting.
Hospitals and Medicaid/uninsured patients in other states could see relatively less DSH funding growth if overall DSH pools are constrained, reducing resources for non‑Tennessee safety‑net providers.
Restoring and indexing Tennessee's DSH allotment increases federal spending, which could modestly raise federal outlays or crowd out other federal priorities, affecting taxpayers.
Based on analysis of 2 sections of legislative text.
Introduced December 3, 2025 by Diana Harshbarger · Last progress December 3, 2025
Restores Medicaid Disproportionate Share Hospital (DSH) allotments to the State of Tennessee beginning in fiscal year 2026 and each year after. The bill sets Tennessee’s FY2026 allotment equal to the amount the state received for FY2015, requires annual increases tied to the Consumer Price Index for All Urban Consumers (CPI‑U), and treats Tennessee as a “low DSH” state for applying subsequent annual increase rules. The change amends federal Medicaid DSH allocation rules to instruct CMS to provide Tennessee a recurring allotment, apply CPI‑U escalation, and align future increases with the methodology used for low‑DSH states. This is a narrow statutory change that affects how federal DSH funds are calculated and distributed to Tennessee hospitals and the State Medicaid program starting in FY2026.