Review of Illinois Medicaid Disproportionate Share Hospital Payments - Illinois Department of Public Aid, Springfield, Illinois

EXECUTIVE SUMMARY:

The objectives of this audit were to determine whether (1) disproportionate share hospital (DSH) payments were calculated in accordance with the approved State plan and the hospital-specific limit requirements of section 1923(g) of the Social Security Act and (2) State-owned institution for mental disease (IMD) facilities were qualified to receive DSH payments.  Regarding the first objective, the State did not make retroactive adjustments as required by the State plan for limiting the DSH payments to the hospital-specific DSH limits.  From our review of two acute care hospitals, we found that the procedures used by the State did not prevent significant DSH overpayments.  Regarding the second objective, 1 of 10 State-owned IMD facilities that received DSH payments did not qualify for these payments because it did not have the minimum required 1-percent Medicaid inpatient utilization rate.  We recommended that Illinois (1) refund $972,810 to the Federal Government and (2) develop a process to evaluate the ongoing compliance of IMD facilities with the DSH requirements.