Wisconsin Physicians Service Insurance Corporation Did Not Properly Settle Missouri Medicare Disproportionate Share Hospital Payments

With respect to Medicaid patient days, Wisconsin Physicians Service Insurance Corporation (WPS) did not properly settle for Federal fiscal years (FYs) 2010 through 2012 Medicare cost reports submitted by inpatient hospitals in Missouri (Missouri providers) for Medicare disproportionate share hospital (DSH) payments in accordance with Federal requirements. The 20 settled Medicare cost reports that Missouri providers submitted for FYs 2010 through 2012 reflected 612,517 Medicaid patient days. The 10 selected providers (with those 20 associated cost reports) improperly claimed a total of 7,132 Medicaid patient days on their cost reports, resulting in DSH overpayments totaling $3.0 million. These improper claims included both unallowable and unsupported Medicaid patient days and involved patients in the excluded categories of family planning and family planning-related services, the Children's Health Insurance Program, temporary prenatal care services, State-only programs, patients who did not meet the designated spenddown requirements to qualify for spenddown programs, and dual eligibility.

These errors occurred because the selected providers did not properly claim Medicaid patient days in accordance with Federal requirements when they prepared and submitted their cost reports to WPS. Providers did so because they were not sufficiently educated on the excluded categories that did not qualify for Medicare DSH payments.

Had WPS communicated with State Medicaid agency officials annually to identify and obtain updated listings of Missouri Medicaid eligibility codes as well as other State-level guidance affecting programs and other categories of services that figure into Medicare DSH cost report payments, the errors we identified could have been prevented.

We recommended that WPS recover the $3.0 million in Medicare DSH overpayments from the selected Missouri providers, reopen and revise settled cost reports (from Missouri providers) that we did not review, and refund overpayments to the Federal Government. We also recommended that WPS communicate annually with the Missouri State Medicaid agency to obtain updated eligibility information and furnish education to providers regarding the categories that are not considered to be Medicaid programs for purposes of Medicare DSH payments.

WPS concurred with our first recommendation but did not concur with our recommendation to reopen and revise settled cost reports (from Missouri providers) that we did not review. WPS agreed with our remaining recommendations. After reviewing WPS's comments, we maintain that all of our recommendations remain valid.