Medicaid Supplemental Pool Payments

The TennCare waiver provides funding authority for hospital supplemental pool payments that are designed to offset unreimbursed Medicaid, uninsured, and charity care costs.  Within the waiver, two funds are established – the Virtual DSH Fund and the Uncompensated Care Fund for Charity Care, referred to as the Charity Care Fund.

Funding in Virtual DSH, which includes the unique Statutory DSH allotment for Tennessee, is used to reimburse hospitals for uncompensated care.  The payment methodology used to distribute payments from this fund ensures payments are proportional to a hospital’s Medicaid volume, unreimbursed Medicaid costs, and charity care costs.  TennCare’s total spending authority for Virtual DSH is $508.9 million with $225 million distributed to hospitals.

The sub pools within Virtual DSH are:

  • Statutory DSH – federal allotment of $53.1 million
    • Total computable for SFY26 is $82.7 million
  • Virtual DSH pools – $127.7 million
    • Safety Net, Children’s, Other Acute, Psychiatric pools
  • Critical Access Hospital (CAH) Cost-based Reimbursement – $15 million

 

Funds in the Charity Care Fund are used for healthcare costs to offset uncompensated medical care that is provided for low-income individuals that are uninsured.

The sub-pools in the Charity Care Fund are:

  • Uncompensated Charity & Self-Pay – $435 million
  • Research & Rehabilitation Pool – $3 million
  • Safety Net Charity Care pool – $35 million
  • Public Hospital Supplemental Pool (IGT) – $100 million
  • Meharry Medical College Pool – $10 million

The Charity Care Fund is currently authorized for $589.9 million.  In SFY26, $551.7 million is distributed to hospitals.

TennCare Supplemental Pools and the Joint Annual Report of Hospitals Webinar

This webinar was presented in June of 2025 by Jenny Murphy, Sr. Director of Financial Policy and Rodney Adams, SVP of Finance and Reimbursement.

Slides | Recording

Below is the document that clearly outlines the distribution methodology for TennCare Supplemental Pool Payments:

Distribution Methodology for Uncompensated Care Payments

 

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