Review of Contractual Service Expenditures Claimed by New Jersey to the Disproportionate Share Hospital Program for the Period April 1, 1997 Through June 30, 2001

EXECUTIVE SUMMARY:

This report points out that $106.7 million of contractual service costs claimed as eligible disproportionate share hospital (DSH) expenditures were allowable for Federal funding.  However, contrary to applicable provisions of the Social Security Act and the New Jersey State plan, $3.7 million ($1.8 million Federal share) was improperly claimed for Federal reimbursement.  This is the fourth in a series of reports on Medicaid DSH claims prepared by a consultant under a contingency fee contract and submitted by New Jersey for Federal reimbursement.  The Senate Finance Committee is investigating Medicaid revenue-maximizing arrangements between States and private consulting firms and requested the results of this review.  The State concurred with our recommendations.  We recommended that New Jersey (1) refund $1.8 million to the Federal Government, (2) adhere to Federal law and State plan requirements when submitting future DSH claims for Federal reimbursement, and (3) review all work performed by consultants to ensure the veracity of future Medicaid claims to the Federal Government.