Review of Illinois Medicaid Disproportionate Share Hospital Payments to Mount Sinai Hospital of Chicago

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether disproportionate share hospital (DSH) payments to Mount Sinai Hospital exceeded the hospital-specific limits imposed by section 1923(g) of the Social Security Act.  Specifically, we determined whether the Medicaid inpatient, outpatient, and DSH payments made by Illinois to the hospital exceeded the hospital's costs of providing inpatient and outpatient services to Medicaid beneficiaries and uninsured patients (charity care).  The State's DSH payments to Mount Sinai Hospital exceeded the hospital-specific limits.  The State paid about $9 million ($4.5 million Federal share) in excess of the hospital's costs of providing inpatient and outpatient services to Medicaid and uninsured patients during State fiscal years 1997 through 2000.  The excessive payments occurred because the State did not have effective procedures to ensure compliance with the hospital-specific limits or with State plan and State Administrative Code requirements.  For example, the State did not use actual cost data to calculate DSH payments.  The State also did not compare Medicaid payments (including DSH payments) with the hospital's actual Medicaid and charity care costs and did not adjust DSH payments as required by the State plan's retroactive adjustment provisions.  We recommended that the State (1) refund $4.5 million to the Federal Government, and (2) compare annual Medicaid payments (including DSH payments) with the actual cost of providing services to Medicaid and uninsured patients for all hospitals receiving DSH payments and, if applicable, make retroactive adjustments as required by the State plan, including the recovery of any identified overpayments.