Yesterday the updated SSI percentage was published by CMS. As 340B covered entities are all too aware the declining SSI utilization rate has been a continuous drag on the overall DSH percentage, negatively impacting 340B eligibility. Advis recommends assessing the recently published SSI to determine the overall impact on your entities’ forthcoming cost report filing.
Overall, there was a collective average drop in SSI of -11.1% across the United States in comparison to the previous year. Several states experienced a significant drop of more than 20%, on average when compared to last year’s publication, including:
The Supplemental Security Income (SSI) Ratio is a key component in the Medicare Disproportionate Share Hospital (DSH) calculation, which provides additional reimbursement to hospitals serving a high percentage of low-income patients. The SSI Ratio specifically measures the proportion of a hospital’s Medicare inpatient days that are associated with patients who also receive Supplemental Security Income (SSI) benefits—a federal assistance program for aged, blind, and disabled individuals with limited income and resources.
The Medicare/SSI Ratio is calculated as:
This ratio is used in conjunction with the Medicaid Fraction, which reflects the percentage of inpatient days for Medicaid-eligible patients who are not entitled to Medicare Part A. Together, these two components determine the Disproportionate Patient Percentage (DPP), which dictates whether a hospital qualifies for Medicare DSH payments and the level of additional reimbursement it will receive.
Impact on DSH Reimbursement
A higher Medicare/SSI Ratio increases a hospital’s DSH percentage, leading to higher DSH reimbursement from Medicare. Since DSH payments are designed to offset the financial burden of treating low-income patients, hospitals with a significant number of Medicare beneficiaries who also receive SSI see greater financial support. This reimbursement is essential for safety-net hospitals that serve a disproportionate number of economically disadvantaged patients.
Impact on 340B Program Eligibility
Beyond DSH reimbursement, the Medicare/SSI Ratio also influences a hospital’s eligibility for the 340B Drug Pricing Program. To qualify for 340B, a DSH hospital must have a minimum DSH adjustment percentage of 11.75% (for Cancer Hospitals, General Acute Care Hospitals, and Children’s Hospitals) or an 8% threshold (for Sole Community Hospitals and Rural Referral Centers). Because the Medicare/SSI Ratio contributes to this percentage, any change in the ratio can directly affect whether a hospital qualifies or maintains its participation in the 340B program.
The 340B program allows eligible hospitals to purchase outpatient drugs at significantly reduced prices, helping them stretch resources and provide expanded services to underserved populations. If a hospital’s Medicare/SSI Ratio declines, it may lower the hospital’s DSH percentage below the 340B eligibility threshold, risking the loss of 340B status and its associated drug pricing benefits.
The Future of SSI
The state of SSI is also currently being challenged at the Supreme court, with oral arguments being heard in the Advocate Christ Medical Center et al. v. Bacerra.
The central issue of which is the interpretation of the term “entitled to” SSI benefits. Hospitals’ argue that “entitled to” should encompass all patients enrolled in the SSI program at the time of hospitalization, regardless of whether they received an SSI cash payment during that specific month. HHS contends that only patients who actually received SSI cash payments during their hospital stay should be considered “entitled to” SSI benefits. If the court sides with the hospital’s interpretation, it is widely expected that the SSI percentage will increase.
Reach out to Advis today to discuss the impact of the most recently published SSI percentage and to discuss strategies to help improve your hospitals DSH.
Published March 18, 2025
