Medicare DSH, Worksheet S-10, and the OBBBA: Strategic Financial Implications for Hospital CFOs

February 04, 2026

The One Big Beautiful Bill Act (OBBBA) introduces a series of downstream financial impacts that hospitals should closely monitor, particularly as they relate to Medicaid coverage shifts and the resulting changes to reimbursement programs such as Medicare Disproportionate Share Hospital (DSH) and Worksheet S-10. A key component of the Act is the anticipated loss of Medicaid eligibility for an estimated 10–12 million individuals nationwide, a demographic change that will materially alter payer mix and revenue integrity profiles for most hospitals.

As Medicaid enrollment declines, organizations may experience downward pressure on their DSH percentage, resulting in lower DSH payments and potential changes to their eligibility for the 340B pharmacy program. Hospitals should closely monitor their Medicare DSH percentages on a monthly or quarterly basis. Many hospitals are performing interim DSH scrubs during the fiscal year. Conducting an in-depth analysis of the current hospital service lines and distinct units is highly recommended.

At the same time, hospitals should anticipate increases in reported uncompensated care amounts as patients who previously had Medicaid become uninsured. This shift not only reduces Medicaid revenue but will likely alter Charity Care and Bad Debt patterns captured on Worksheet S-10. As the uninsured population grows, hospitals must ensure that internal documentation processes accurately capture charity eligibility, financial assistance screenings, and collection efforts. Each of these is critical for compliant and optimized S-10 reporting.

Given the reimbursement sensitivity associated with Worksheet S-10, hospitals may want to review and refine their Financial Assistance Policies (FAPs) to ensure they appropriately address the needs of self-pay patients and support the maximum allowable UCC reporting. A well-structured FAP can influence future UCC payment allocations by improving the quality and completeness of charity care documentation.