SAFE Hospitals Act of 2023

The SAFE Hospitals Act of 2023 changes how Medicaid funds are distributed to hospitals serving low-income patients. It establishes a tiered system prioritizing hospitals with the highest Medicaid inpatient utilization rates and low-income patient percentages (Tier 1 hospitals receive highest priority), requiring states to adjust their payment methodologies accordingly. The bill also creates a "DSH reserve" system allowing states to adjust their allotments within limits (up to 10% reduction or increase) for budget planning while maintaining minimum funding levels. These changes, effective October 1, 2025, affect all states receiving Disproportionate Share Hospital (DSH) payments and the qualifying hospitals within those states.