Review of Medicaid Disproportionate Share Funds Flow in the State of Missouri

Our objective was to review the role of the Missouri Hospital Association (MHA) and its subsidiary corporation MHA Management Services Corporation (MHA/MSC), in the disbursement of Medicaid disproportionate share (DSH) funds to hospital providers.  A further objective was to determine whether DSH funds were received by Missouri hospitals in accordance with federal regulations and the Missouri Medicaid State plan (State plan).  During the three-year period of our review, the State of Missouri claimed $1.5 billion in federal financial participation (FFP) for DSH payments to hospitals.  We found that Missouri hospitals receive DSH payments in accordance with federal regulations and the State plan.  However, subsequent voluntary redistributions of DSH funds by the MHA/MSC result in DSH funds being used to support Missouri's Federal Reimbursement Allowance (FRA) program rather than to provide financial support to hospitals that serve a disproportionate share of Medicaid patients.