Chart 1: Intergovernmental Transfer Financing (DSH) County Provider and State Profit Example

Chart 1 shows an example of Disproportionate Share Hospital (DSH) intergovernmental transfer (IGT) financing resulting in county provider and state profit. The example is of a State with a statutory match rate of 60 percent. The State claims an expenditure of $100, where CMS pays the match, or $60, and the county provider makes an intergovernmental transfer of $60 - the amount equal to the federal share. The State then pays the provider $100. The net loss to CMS is $60, whereas the net gain by the state is $20 ($60 CMS payment + $60 IGT - $100 payment to the county). The county provider nets $40 ($100 payment from the State - $60 IGT). Therefore, although the statutory match rate for the example State is 60%, the effective match rate is 100%.

Last Revised: November 6, 2003