Review of Medicaid Upper Payment Limit Requirements for Colorado

EXECUTIVE SUMMARY:

Our audit objectives were to determine whether the Colorado upper payment limit (UPL) and the related payments were reasonable and calculated in accordance with the revised Federal regulations and the approved state plan and whether UPL payments had been properly included by Colorado when calculating disproportionate share hospital specific payment limits.  Our review disclosed that Colorado followed its Medicaid state plan, and Federal laws and regulations for calculating the UPL payments.  However, Colorado did not follow 42 Code of Federal Regulations, Subpart D, ' 420.300-304 supporting the calculation for the UPL for inpatient hospitals. We recommended Colorado keep all information needed to calculate the current State Medicaid rates for a minimum of 4 years.  Colorado officials agreed that the information supporting the 2003 Medicaid rates were lost but stated that they received approval from CMS to modify the Medicare UPL of inpatient hospital services.