DSH in Tennessee Act

Summary

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.

• Requires CMS to restore a Medicaid DSH allotment to Tennessee beginning in fiscal year 2026 and thereafter.
• Sets Tennessee’s FY2026 allotment equal to the DSH amount the state had for FY2015.
• Mandates annual increases to Tennessee’s allotment based on CPI‑U changes (All Items; U.S. city average).
• Designates Tennessee as a “low DSH State” for post‑2026 increase calculations and applies the same increase methodology as other low‑DSH states.
• Modifies statutory cross‑references so the new Tennessee subparagraph is included in the existing allocation framework.
• Affects CMS administration of Medicaid DSH allotments but does not itself appropriate new funds or create new Medicaid program rules.
• Directly benefits hospitals and the State of Tennessee by restoring federal DSH funding and indexing it for inflation.
• Narrow, state‑targeted change rather than a broad Medicaid reform.