New Jersey Claimed Excessive Medicaid Disproportionate Share Hospital Payments to Four Hospitals

The New Jersey Department of Human Services (State agency) generally claimed Federal reimbursement for Disproportionate Share Hospital (DSH) payments that did not exceed hospital-specific limits. DSH payments may not exceed hospitals' uncompensated care costs for providing services to patients who are eligible for Medicaid or have no health insurance for services provided during the year (known as the "hospital-specific limit").

The State agency claimed reimbursement for DSH payments to four hospitals that exceeded the hospital-specific limit by $44 million ($22 million Federal share). The overpayments occurred because the State agency had not established procedures for reconciling and adjusting DSH payments to hospital-specific limits. The State agency claimed reimbursement for DSH payments totaling $1.07 billion ($534.1 million Federal share) to 88 hospitals that did not exceed the hospital-specific limit.

We recommended that the State agency (1) refund $22 million to the Federal Government and (2) establish procedures for reconciling and adjusting DSH payments to hospital-specific limits. The State agency disagreed with our first recommendation, concurred with our second recommendation, and described steps that it had taken or planned to take to implement that recommendation.