Tennessee Hospitals Lock In Permanent Federal Funding Starting in 2026, Indexed to Inflation

The “Delivering Support for Hospitals in Tennessee Act,” or the “DSH in Tennessee Act,” is a focused piece of legislation designed to lock down a permanent, predictable funding stream for Tennessee hospitals that treat a high number of uninsured or Medicaid patients. This bill essentially takes the uncertainty out of a key federal funding mechanism known as Disproportionate Share Hospital (DSH) payments.

Securing the Hospital Safety Net

Starting in Fiscal Year 2026, this bill sets Tennessee’s DSH funding floor. Instead of relying on annual federal calculations that can fluctuate, the state’s allotment will be fixed at the level it received in Fiscal Year 2015. Crucially, that 2015 amount will be adjusted upward using the percentage change in the Consumer Price Index for all Urban Consumers (CPI). Think of it like this: the bill makes sure that the money hospitals use to cover the costs of uncompensated care—which is often the difference between keeping a rural hospital open or closed—doesn’t get eroded by inflation before the program even starts.

The 'Low DSH State' Advantage

For every year after 2026, the bill ensures Tennessee is treated as a “low DSH State” under federal law (Section 1923(f)(5)(B) of the Social Security Act). This designation is key because it means Tennessee’s DSH allotment will automatically increase annually using the same formula applied to other states in that category. This isn't just about getting money; it’s about getting predictable money. For hospital administrators, this certainty allows for better long-term planning, whether they are budgeting for new equipment or deciding how much staff they can afford to keep on hand in the emergency room.

What This Means for Everyday Life

If you live in Tennessee, this bill translates directly into financial stability for the hospitals you rely on. DSH payments are the federal government's way of helping hospitals that serve a disproportionate share of patients who can't pay their bills. By fixing this funding level and tying it to inflation, the bill aims to prevent the kind of financial shocks that can lead to service cuts or hospital closures, particularly in smaller towns. For example, a nurse working at a regional medical center can be more confident that their hospital will be able to maintain its current level of emergency and specialty services, because a core part of its federal funding is now secured and inflation-proofed. The financial stability this provides helps keep the doors open and the services running.

The Bigger Picture: Who Pays?

While this is a clear win for Tennessee hospitals, it’s worth noting the mechanics of federal funding. Locking in a specific level of federal spending for Tennessee means that the federal government (and by extension, the federal taxpayer) is committed to this allocation. Furthermore, DSH funding is a finite pool shared among states. Securing a permanent, inflation-adjusted slice for Tennessee could indirectly affect the amount of funding available for other states. However, for the people of Tennessee, this legislation is a straightforward measure to shore up the financial foundation of their local healthcare safety net.