GAO Releases Report on Medicaid DSH and the DSH Reporting Rule - January 5, 2010

On December 22, the Government Accountability Office (GAO) released a report, dated November 2009, which examined Medicaid disproportionate share hospital (DSH) payments and hospital-specific DSH limits in 2006 in four states—California, Michigan, New York, and Texas. In particular, the GAO examined whether states appropriately took into account all Medicaid payments received by hospitals when calculating the hospital-specific limits and whether states updated hospital-specific limits to account for actual costs. GAO also made calculations to compare DSH payments as a percent of DSH payment limits for various categories of hospitals (including government/private, general acute/institutions for mental disease/children's hospitals). GAO did not assess in detail state methodologies for calculating the hospital-specific limits, nor did they take into account the DSH reporting and audit rule issued last December, although this rule was mentioned by CMS in its comments. The report was prepared at the request of Senate Finance Committee Ranking Member Charles Grassley (R-IA) and, in many ways, is a follow-up to a May 2008 GAO report regarding the need for more information about Medicaid supplemental payments.