Audit of Oregon's Medicaid Upper Payment Limits for Non-State Government Inpatient Hospitals for State Fiscal Year 2003

EXECUTIVE SUMMARY:

The objectives of our audit were to determine whether Oregon (1) calculated upper payment limits (UPLs) for non-State government inpatient hospitals in accordance with Federal regulations and the approved State plan amendment and (2) properly included UPL payments in the calculation of hospital-specific disproportionate share hospital (DSH) limits.  Oregon's UPL calculations generally complied with Federal regulations and its State plan amendment.  However, Medicaid payments exceeded the UPLs by $5,721,109 ($3,412,987 Federal share).  Oregon made UPL payments to one non-State government inpatient hospital eligible for DSH payments, but did not calculate a DSH limit for that hospital.  We recommended that Oregon (1) refund to the Federal government $3,412,987 in overpayments, (2) monitor Medicaid payments to ensure that payments do not exceed the UPL and refund the Federal share of any overpayments, (3) use applicable Medicare rates in future UPL calculations, and (4) calculate DSH limits from prior and future periods in accordance with applicable requirements and refund the Federal share of any overpayments.  Oregon agreed in part and disagreed in part to our findings and recommendations.