SAFE Hospitals Act of 2023

The SAFE Hospitals Act of 2023 reforms how federal Disproportionate Share Hospital (DSH) payments are calculated and distributed to hospitals serving high numbers of low-income patients. It replaces the previous formula with one based on state poverty levels, creating a phase-in period from 2026-2035. The bill establishes a tiered system (Tier 1 through Tier 4) for hospitals based on Medicaid inpatient utilization rates and low-income patient percentages, with Tier 1 hospitals (those serving the highest volumes of Medicaid patients) receiving priority for funding. States gain flexibility to adjust payments within certain limits to provide more consistent funding, while hospital qualification requirements change effective October 1, 2025. These changes directly affect hospitals receiving DSH payments and state Medicaid programs that distribute these funds.