Audit of Texas Medicaid Inpatient Disproportionate Share Hospital Program for Hospital Fiscal Years 1996 through 1998

EXECUTIVE SUMMARY:

This report points out that the Texas Medicaid state plan, with regard to calculating disproportionate share hospital (DSH) payment limits, did not comply with the intent of the Omnibus Budget Reconciliation Act (OBRA) of 1993. The state made payments to hospitals on a progressive basis, but did not have controls in place to assure that payments did not exceed the actual costs of providing services to patients, which we believe was the intent of the OBRA of 1993. As a result, DSH payments totaling approximately $511.4 million ($319.2 million federal share) were paid to Texas hospitals in excess of hospital specific limits for hospital fiscal years 1996 through 1998. Among other things, we recommended that Texas work with the Centers for Medicare and Medicaid Services to address and resolve the $511.4 million ($319.2 million federal share) of DSH payments in excess of hospital specific limits.