It's because in addition to the reimbursement, hospitals are paid a bonus fee by US taxpayers called a DSH to subsidize the subsidies. This serves to incentiviz

It's because in addition to the reimbursement, hospitals are paid a bonus fee by US taxpayers called a DSH to subsidize the subsidies. This serves to incentivize providers not to drop Medicare/Medicaid patients and also covers up the losses incurred. More info: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Paymen... Good commentary about upcoming changes that endanger these programs: http://www.modernhealthcare.com/article/20170626/NEWS/170629916 http://www.modernhealthcare.com/article/20170626/NEWS/170629...