Audit of California's Medicaid Inpatient Disproportionate Share Hospital Payment for Kern Medical Center, Bakersfield, California, State Fiscal Year 1998

EXECUTIVE SUMMARY:

This final report points out that the California Department of Health Services made Medicaid disproportionate share hospital (DSH) payments to Kern Medical Center (KMC) that exceeded by $19.4 million (federal share) the hospital specific limit for DSH payments as mandated by the Omnibus Budget Reconciliation Act of 1993. This problem occurred primarily because the state:  (1) used projected amounts instead of actual expenses and payments, (2) did not limit total operating expenses to amounts that would be allowable under Medicare cost principles, (3) included bad debts as additional operating expenses, and (4) double counted charges for a program and included charges for services provided to inmates and Kern County employees. We recommended financial adjustments and procedural corrections. The state generally disagreed with our findings and recommendations.