The Centers for Medicare and Medicaid Services needs to do a better job monitoring the billions of dollars it provides in supplemental payments through the Medicaid program, according to a recent report from the Government Accountability Office.
CMS needs to expedite efforts to issue a final rule implementing additional reporting requirements for disproportionate share hospitals, the GAO found. In addition, it needs to better track and review states' supplemental payment programs.
The report found that CMS lacks information on several aspects of the supplemental payment program, particularly as it relates to disproportionate share hospitals, which are safety net hospitals that treat large numbers of Medicaid and uninsured patients.
Medicaid is a long-standing program jointly funded by federal and state governments. In addition to standard Medicaid payments, many states make supplemental payments to certain providers, which are matched by federal funds. States made at least $23 billion in supplemental payments in fiscal year 2006; of that, $17.1 billion was designated for disproportionate share hospitals.
The program has been controversial from many perspectives, facing charges that it is ineffective at funneling funds to financially vulnerable hospitals and that it lacks checks and balances that would enable effective oversight. The program previously was scrutinized by the GAO in 2004.
The latest GAO report found that states made $6.3 billion in non-DSH payments to hospitals, but information on those payments was incomplete. The GAO said it could not ascertain the exact amount and distribution of fiscal year 2006 non-DSH payments because states did not report all their payments to the CMS.
CMS officials told the GAO that the agency is updating reporting requirements to collect better information on supplemental payments and that it's finalizing a rule proposed in 2005 that requires states to report more detailed information on DSH payments. It's also seeking improvements in the reporting of other non-DSH payments.
As of April 2008, CMS officials did not have plans to require that states report all non-DSH payments on a facility-specific basis.
In its most recent report, a GAO survey found that California, Massachusetts, Michigan, New York and Texas made $12.3 billion in Medicaid supplemental payments in fiscal 2006. The five states made payments through a total of 48 supplemental payment programs that paid hospitals, nursing facilities or other providers.
In each of the five states, supplemental payments were concentrated on a small proportion of providers, with 5 percent of payments coming from 53 percent to 71 percent of all supplemental payments.