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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Washington State’s Disproportionate Share Hospital Program," (A-10-01-00001)

October 25, 2002

Complete Text of Report is available in PDF format (1.31 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out that Washington made Medicaid disproportionate share hospital (DSH) payments in excess of hospital-specific limits and that were not in accordance with the approved state plan. Specifically, the state paid $43.9 million (federal share $23.1 million) in excess of hospital specific limits, and $0.4 million (federal share $0.2 million) to six hospitals not eligible for some DSH programs. This problem occurred because the state did not reconcile DSH payments to actual costs, used billed charge amounts (instead of actual costs) in some calculations, and included unallowable bad debt amounts in its limits calculations. Also, the state did not review hospital eligibility for all DSH programs on an annual basis. We recommended financial adjustments totaling $23.3 million (federal share). We also recommended procedural improvements intended to strengthen the state’s management controls.