Creative payment strategy helps ensure a future for teaching hospitals

The Colorado Medicaid Program in years past relied on disproportionate share hospital (DSH) payment programs to increase access to hospital care for Colorado citizens, ensure the future financial viability of key safety-net hospitals, and partially offset of the state's cost of funding the Medicaid program. The options to finance Medicaid care using DSH payments, however, recently have been severely limited by legislative and regulatory changes. Between 1991 and 1997, a creative Medicaid refinancing strategy called the major teaching hospital (MTH) payment program enabled $131 million in net payments to be distributed to the two major teaching hospitals in Colorado to provide enhanced funding related to their teaching programs and to address the ever-expanding healthcare needs of their low-income patients. This new Medicaid payment mechanism brought the state $69.5 million in Federal funding that otherwise would not have been received.