Provider Notice issued 04/27/2026

Rate Year 2027 Determination for Disproportionate Share and Medicaid Percentage Adjustment Payments – Important New Procedures for Data Collection

This notice describes the information required by the Department to determine which hospitals will qualify in Rate Year 2027 for Disproportionate Share Hospital (DSH) Adjustment Payments and Medicaid Percentage Adjustment (MPA) Payments in accordance with 89 Illinois Administrative Code 148.120 and 148.122. Data used to determine eligibility and calculate rates is from your hospital’s 2024 cost reporting period. 

The Department is improving the data collection process and time period for inclusion of MCO days not contained in the Department’s data warehouse.  Please see ‘New Policy and Procedures’ instructions on page 3 below. 

Claims data used in the determination must be adjudicated by the Department by June 30, 2026. The Illinois Administrative Code provides for no exceptions to that deadline. Other data must be received by the Department or postmarked no later than July 1, 2026. 

The required forms needed are available for download at this link.  As in prior years, these forms should be completed and mailed to the contact person and address specified on the form by the appropriate due date. 

Completion of these forms is vital to the accurate completion of the annual determinations and could significantly impact a provider’s qualification for a number of reimbursement programs administered by the Department. 

DSH and MPA Determination  

The information required by the Department for the DSH and MPA adjustment determination is outlined below. Items 1 through 4 apply to all Illinois hospitals. Out-of-state cost reporting hospitals need only to submit the information required under items 1 and item 4, as the information needed to calculate Medicaid utilization levels for out-of-state hospitals obtained in items 2 and 3 will be obtained from the Medicaid agency in that state. Please note that all required information submitted must be based on your hospital's 2024 cost reporting period statistics. 

1. Hospitals providing nonemergency obstetrical care to the general public must provide, in writing, the names of at least two obstetricians with staff privileges at the hospital who have agreed to provide obstetrical services to individuals entitled to Illinois Medicaid.  Hospitals not offering nonemergency obstetrical care to the general public must provide a statement to that effect. Please complete Part I or Part II of the Disproportionate Share Obstetrical Statement and return it to the Department by July 1, 2026. 

2. In making the determination, the Department will utilize final audited cost reports for each hospital's 2024 cost reporting period. In the absence of a final audited cost report, the Department will utilize the hospital's unaudited cost report. Data derived from audited cost reports will be considered final. If your hospital's cost report is unaudited and you feel relevant data therein are incorrect, a corrected cost report must be received or postmarked by July 1, 2026 (metered dates are not acceptable). In accordance with section 148.120(c)(1), cost report corrections received or postmarked beyond July 1, 2026, cannot be considered. 

Please Read: 

The cost reports submitted by hospitals must only include claims that can verify eligibility of the individual/s against the Department’s system. Because the Department cannot verify eligibility of the individual/s in unbilled, denied, or portions of claims determined non covered, those claims should not be included in the report.1 Fee-for-service days not included on the cost report cannot be included on appeal. All other types of Medicaid claims that are not to be included on the cost report and the source of the data for those claims are identified in #3 below. Cost reports will be audited against the Department’s paid claims database, and in accordance with the previously established process, the Department will limit Medicaid days to the verified paid claims in the Department’s database if there is more than a 10 percent variance between the cost report and the days in the paid claims database.  

For further clarification, please refer to the cost report instructions.

3. Certain types of inpatient days of care provided to Title XIX recipients are not available from the cost report. They are: (1) Medicare/Medicaid crossover days, (2) hospital residing long term care days, (3) Illinois Department of Human Services (DHS), Division of Substance Use Prevention and Recovery (SUPR) days (formerly DASA days), (4) Medicaid managed care organization (MCO) days, and (5) Out-of-state Title XIX Medicaid utilization levels. 

a. The Department will utilize its paid claims data for each hospital's 2024 cost reporting period to determine the number of Medicare/Medicaid crossover days, hospital-residing long term care days, SUPR days and MCO days. All claims must be adjudicated by June 30, 2026, to be included in the determination and rate setting process. 

b. Hospital statements and verification reports from other states will be required to verify out-of-state Medicaid recipient utilization levels. The information submitted must include only days of care provided to out-of-state Medicaid recipients during the hospital's 2024 cost reporting period. 

4. Hospitals may also qualify for DSH status if their low-income utilization rate exceeds 25%. To calculate a hospital's low-income utilization rate, the hospital must fill out the Low Income Utilization (LIU) Collection Form and submit an audited certified financial statement for their 2024 cost reporting period.   

[1] The Department verifies all eligible Medicaid patients through the billing and payment process, which is a requirement under 42 CFR 455.1(a)(2). Including all claims that cannot be verified through this process would put the Department at risk for fraud, waste, and abuse.

All information described in Sections 1 through 4 above is necessary to conduct the Rate Year 2027 DSH and MPA determination and must be received by, or postmarked to the Department no later than July 1, 2026, at the appropriate address listed below. Information for Sections 1 through 4 above that is postmarked after July 1, 2026, will not be considered for the DSH or MPA determination. 

New Policy and Procedures

The Department will continue to allow hospitals to provide additional data for inclusion of MCO claims that are not contained in the Department’s data warehouse. Historically, this was done upon appeal, after the initial MIUR publications. 

Please follow the procedures below to request inclusion of additional MCO days: 

Data submitted to HFS must be sent in a secured manner. A SharePoint folder will be set up for your hospital to securely exchange files. To establish the secured folder: 

1.  Email hfs.hospitals@illinois.gov  
2. Provide the email addresses of the individuals who need access to the folder. 

• By April 30th, the Department will post a report of all accepted claims contained in the Department’s data warehouse to each hospital’s SharePoint folder. We ask that you carefully review the claims in this file for any omissions.  

     

• Hospitals must submit a request for additional MCO days to be considered to the Department by posting the request to the SharePoint folder no later than June 30, 2026, in the following format. 

Information supplied by the hospital for additional days provided MUST be in the following format and MUST include the following data in Excel: 

Example: 

Format: 

Note: To ensure accuracy and efficiency, the data must be in the appropriate columns and rows. The titles should be in row 1, as shown in the example. Data should begin in row 2. The data must be formatted as indicated above to ensure the accuracy of the HFS reports used to verify the submitted data. Any data not provided in this format will not be considered for inclusion in the calculations. Common errors that are submitted include dropping leading 0s in the Recipient ID, letters in the Recipient ID, dates in formats other than YYYY-MM-DD, and days for dates of service outside of the hospital’s cost reporting period. Any additional information submitted is not considered and may result in the request being denied. 

Requests for additional MCO days will not be accepted after June 30th and will no longer be accepted during the appeal period after the MIURs are published by the Department. 

Omnibus Budget Reconciliation Act of 1993 (OBRA’93)

It is imperative in Rate Year 2027 that the Department collect data found on the OBRA’93 Data Collection Form from all hospitals. It is mandatory that the following data be submitted by all hospitals for Rate Year 2027, regardless of DSH eligibility. 

In order to determine if the Department meets federal guidelines set forth in the Omnibus Budget Reconciliation Act of 1993 (OBRA'93), all cost reporting hospitals must complete and send the OBRA’93 Data Collection Form to the Department by August 15, 2026 (mail postmarked on or before that date is acceptable; metered dates are not acceptable), with the following information for the hospital’s 2024 cost reporting period. 

1. The dollar amount of Illinois inpatient Medicaid charges. 

    2a. The dollar amount of total inpatient and outpatient hospital charity care charges incurred for services provided to individuals without health insurance or other source of third-party coverage.  

    2b. The dollar amount of total inpatient and outpatient bad debt incurred by the hospital, less any recoveries for services provided to individuals without health insurance or other source of third-            party coverage (not including charges reported under charity care, above). 

    3.  The dollar amount of total inpatient and outpatient charges incurred by the hospital (includes all financial classes).    

Notes:    

For items 2a and 2b, do not include unpaid co-pays or third-party obligations of insured patients, contractual allowances, or the hospital’s charges or reduced charges attributable to services provided under its obligation pursuant to the federal Hill-Burton Act. 

For items 2a and 2b, state or unit of local government payments made to a hospital on behalf of indigent parties shall not be considered a form of insurance or a source of third-party coverage.  

In the case of a new hospital, please submit the above-required information from the time your hospital began operating through the hospital’s cost reporting period. Please indicate the date your hospital began operating. 

Failure to provide the required OBRA'93 information, separated by inpatient and outpatient charges, by August 15, 2026, may result in the hospital receiving a lower DSH rate or being ineligible for DSH payments in Rate Year 2027. 

Appeals 

The Department will post to the Hospital Reimbursement Notifications webpage the Rate Year 2027 DSH and MPA rate notices to all cost reporting hospitals. In accordance with 89 Ill. Admin. Code 148.310, hospitals will have thirty days from the date of the rate notice to make appeals. All appeals must include detailed challenges to the calculation of the rate.  Appeals for additional days will not be accepted.  The Department cannot accept appeals submitted beyond the thirty-day limit nor can it accept, as a substantive appeal, letters that only request an extension of the thirty-day limit. 

Submittal of Information 

Corrected cost report information, the LIU Collection Form in addition to audited certified financial statements, and the OBRA '93 Data Collection Form must be submitted to the following address: 

Illinois Department of Healthcare and Family Services 
Bureau of Health Finance
Hospital Audit Section 
Attention: Chris Dirks 
2200 Churchill Rd 
Springfield, Illinois 627023406 
FAX (217) 7822812 
E-mail: HFS.healthfinance@illinois.gov

Note: Audited certified financial statements must only be submitted if the hospital’s low-income utilization rate exceeds 25% for the DSH and MPA determination. Corrected cost reports must only be submitted if your hospital’s 2024 cost report is unaudited, and you feel it is incorrect. 

It is strongly recommended and encouraged that all other information required for the DSH and MPA determination (obstetrical statement and outofstate Medicaid utilization levels) be submitted to the secured SharePoint folder.  

In the event this information cannot be submitted electronically, the information must be mailed to: 

Illinois Department of Healthcare and Family Services 
Bureau of Rate Development and Analysis 
Disproportionate Share Unit
Attention: Candace Flatt 
201 South Grand Avenue East, 2nd Floor 
Springfield, Illinois 627630001 
FAX (217) 5249403 

Questions regarding cost report information, certified financial statements and the OBRA'93 form should be directed to the Bureau of Health Finance at (217) 5244540. All other questions should be directed to the Bureau of Rate Development and Analysis at (217) 7850710 or email at hfs.hospitals@illinois.gov. 

Kathleen Staley, Chief, 
Bureau of Rate Development and Analysis