Arkansas Physician Supplemental Payment Program

EXECUTIVE SUMMARY:

Our objective was to determine whether the supplemental payment by the Arkansas Department of Health and Human Services (the State) to the University of Arkansas for Medical Sciences (the University) for provider services was in accordance with the approved State plan and was adequately supported.  

Although the formula used to calculate the supplemental payment was generally in accordance with the State plan, the supplemental payment was not adequately supported.  Specifically, the average commercial payment rate included noncommercial charges and duplicate commercial charges and did not include some disallowances.  Additionally, the Medicaid charges and payments used to determine the supplemental payment included ineligible charges and payments.  As a result, the University overstated the average commercial payment rate, and the State overstated Medicaid charges and understated Medicaid payments. 

We recommended that the State work with the Centers for Medicare and Medicaid Services (CMS) to address the weaknesses noted in the report related to the calculation of the supplemental payment, which may require amending the State plan.  We also recommended that any change in the average commercial payment rate be applied to the correct Medicaid charges and payments for the audit period and that any excess payment be refunded to the Federal Government.  The State reported that it was in negotiations with CMS regarding the supplemental payment.