Audit of Georgia's Medicaid Upper Payment Limit Payments for Non-State Government Inpatient Hospitals

EXECUTIVE SUMMARY:

Our objectives were to determine whether Georgia, from July 2002 through December 2002, calculated the upper payment limit (UPL) for non-State government inpatient hospitals in accordance with Federal regulations and the approved State plan amendments and properly included UPL payments in the calculation of hospital-specific disproportionate share hospital (DSH) limits.

After issuing the draft report, Georgia informed us that it received approval from the Centers for Medicare and Medicaid Services (CMS) approval to retroactively change the methodology used to determine UPL calculations.  Because of CMS's actions, the methodology we reviewed is no longer applicable and our UPL findings have been negated.  However, the prior methodology used to calculate Georgia's non-State government inpatient UPL did not comply with Federal regulations or the approved State plan amendments.  As a result, Georgia made UPL overpayments of $67.5 million ($40.2 million Federal share). 

On a separate matter, Georgia may have overstated its DSH limits by not including $144 million in UPL payments in its DSH calculation.  However, in December 2001, CMS granted Georgia a waiver allowing the inclusion of the UPL payments in future years' DSH limit calculations.

 Based on CMS's actions, we have no recommendations.