Review of Alabama's Medicaid Disproportionate Share Hospital Program

EXECUTIVE SUMMARY:

This report points out that Alabama made disproportionate share hospital (DSH) payments that did not comply with the hospital-specific DSH payment limits mandated by the Social Security Act.  As a result, hospitals participating in the managed care arrangement were overpaid about $66 million ($46 million Federal share) in fiscal years 1999 and 2000.  In addition to a financial adjustment for th4e $46 million, we recommended that Alabama calculate DSH limits to include an offset for all Medicaid enhanced payments received by hospitals and calculate uncompensated care costs annually.  We also recommended that Alabama establish controls to ensure the reasonableness and allowability of future uncompensated care costs.