New Jersey Did Not Provide Adequate Oversight of Its Medicaid Delivery System Reform Incentive Payment Program

We could not determine whether New Jersey appropriately claimed Medicaid reimbursement for pay-for-performance incentive payments to five selected hospitals. Specifically, we could not determine if the hospitals met performance goals calculated from Medicaid claims data. In addition, the hospitals did not report patients' health records information consistent with performance measure criteria. As a result, we could not determine what portion of pay-for-performance incentive payments, totaling approximately $51 million ($25 million Federal share), that New Jersey made to the five selected hospitals based on determinations from New Jersey's Delivery System Reform Incentive Payment (DSRIP) program contractor was appropriate.

This occurred because New Jersey did not ensure that the DSRIP program contractor maintained Medicaid claims data to support the achievement of performance goals and did not provide adequate guidance to the hospitals regarding how they should report patients' health records information.

We recommended that New Jersey work with its DSRIP manager and program contractor and the five selected hospitals to determine whether the approximately $51 million ($25 million Federal share) in pay-for-performance incentive payments to the hospitals was appropriate. New Jersey should also work with its DSRIP manager and program contractor and the 44 hospitals not selected for review to determine whether the approximately $132 million ($66 million Federal share) in remaining pay-for-performance incentive payments was appropriate. We also recommended that New Jersey improve its oversight of the DSRIP program to ensure compliance with Medicaid requirements.

In written comments on our draft report, New Jersey disagreed with our findings and did not indicate concurrence or nonconcurrence with our recommendations. However, it described steps that it has taken to improve its oversight of the DSRIP program. After reviewing New Jersey's comments, we maintain that our findings and recommendations are valid.