Ineligible hospitals receive $100M in DSH payments

Five hospitals that did not qualify for disproportionate share hospital (DSH) payments received more than $100 million because of some bad math, the Office of Inspector General said in a report released to the public this week. OIG says the New Jersey Department of Human Services owes half of that back to the federal government, but the state disputes that number.

According to OIG, based on 2003 through 2007 data, five hospitals--Hudson County Meadowview Psychiatric Hospital in Secaucus, Buttonwood Hospital in Pemberton, Mount Carmel Guild in Newark, Saint Barnabas Behavioral Health headquartered in Toms River and Healthsouth Garden State Rehab in Toms River--qualified for the program but shouldn't have been under the classification system.

Medicaid DSH program offers payments for hospitals that serve a disproportionate share of low-income and uninsured payments. Hospitals are deemed DSHs if they have a Medicaid inpatient utilization rate of 1 percent or more. However, OIG found that the billable days at the five psychiatric hospitals did not amount to 1 percent, and the state overpaid the following amounts, according to

  • $39.1 million to Hudson County Meadowview Psychiatric Hospital
  • $5.5 million to Buttonwood Hospital
  • $5 million to Mount Carmel Guild
  • about $5,000 to Saint Barnabas Behavioral Health
  • about $2,500 to Healthsouth Garden State Rehab

"We were doing other audit work," John Hagg, director of Medicaid audits for OIG, told News Works, "and we saw that the state made payments to hospitals that weren't eligible. And that's what caused us to want to go in and do a full audit."

The OIG found the state misinterpreted the federal regulations on eligibility and therefore made miscalculations in the Medicaid inpatient utilization rates.

In total, 109 hospitals in the state claimed more than $6.2 billion in DSH payments, with the federal government reimbursing $3.1 billion to the state (the federal government reimburses the state for half of its DSH payments) from 2003 to 2007.

OIG said the state must refund $50 million the federal government, but the state department said it only owes about $3.5 million, not $50 million. A spokeswoman for the New Jersey Department of Human Services insists the Medicaid claims submitted were correct, with one exception, according News Works.

According to a report last month from the National Association of Public Hospitals and Health Systems, DSH payments will cut by as much as $14.1 billion--a figure that could severely hurt hospitals if states reject Medicaid expansion, FierceHealthFinance reported.

For more information:
- see the OIG summary and report (.pdf)
- read the News Works article
- here's the article

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