Washington, D.C. – States reported a total of $32 billion in Medicaid supplemental payments during the 2010 fiscal year, but an exact figure is not known because such reporting was found to be incomplete, according to a recent analysis conducted by the U.S. Government Accountability Office.

On expenditure reports filed with the U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS), states seeking federal funding reported $17.6 billion in Disproportionate Share Hospital (DSH) payments and $14.4 billion in non-DSH supplemental payments, the analysis indicated.

DSH payments are a key type of regular supplemental Medicaid payments made to providers with the intent of offsetting uncompensated costs of care rendered to uninsured individuals and Medicaid beneficiaries. States also make other types of supplemental payments, referred to as non-DSH supplemental payments, to hospitals and other providers to help offset costs of care provided to Medicaid beneficiaries.

The 10 states reporting the most DSH payments accounted for more than 70 percent of the nationwide total, with four states — New York, California, Texas and New Jersey — accounting for almost half of that total. DSH payments as a percentage of total Medicaid payments varied considerably, ranging from 1 to 17 percent among the 50 states that reported DSH payments, the GAO reported.

Because not all states reported non-DSH payments separately, complete information is not available, the agency added. Non-DSH supplemental payments as a percentage of total state Medicaid spending also varied considerably, likewise ranging from 1 to 17 percent among 30 reporting states.

Non-DSH payments generally can constitute a large portion of states’ expenditures for particular categories of services, such as inpatient or outpatient hospital services, nursing facility services or physician and surgical services. For example, non-DSH supplemental payments for inpatient hospital services ranged from 1 to 48 percent of state expenditures for these services among reporting states.

CMS officials reportedly told the GAO that they are taking steps to improve states’ reporting of non-DSH supplemental payments, including working with states to train staff on reporting of payments and on identifying and resolving reporting problems.

Reported non-DSH supplemental payments grew by more than $8 billion from 2006 to 2010, authorities also noted, adding that more complete state reporting of payments and new and modified supplemental payments were factors in the increase. The information allowing for the identification of such changes came from 39 states that separately reported non-DSH supplemental payments during either 2006, 2010 or both years. Most of the increase originated from the 15 states that reported some payments in both years, but reported higher non-DSH supplemental payments in 2010 than in 2006. In addition, most of the reported increase was tied to inpatient hospital services.

In 11 selected states, the GAO also reportedly found that new and modified supplemental payments contributed to some increases. For example, such payments for hospital services in Colorado and Illinois are estimated to annually increase those states’ non-DSH supplemental payments by about $300 million and $1 billion, respectively. However, data limitations prevented the GAO from quantifying the full extent to which the increase was attributable to new and modified payments.

In describing the reasons for conducting the recent analysis, the GAO noted that it has designated Medicaid a high-risk program because of concerns about its size, growth and inadequate fiscal oversight – the program cost the federal government and states an estimated $383 billion during the 2010 fiscal year. The GAO and other individuals and entities additionally have raised concerns about the transparency of states’ Medicaid supplemental payments.

GAO was asked to provide information contained in its analysis, and in comments on a draft copy, HHS stated that HHS and CMS will continue ongoing efforts to improve states’ reporting of supplemental Medicaid payments.

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Mark Spivey is a correspondent for RACmonitor.com

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