Medicaid: More Transparency of and Accountability for Supplemental Payments Are Needed

A letter report issued by the Government Accountability Office with an abstract that begins "The recently implemented annual audits and reports for states' disproportionate share hospital (DSH) payments could improve oversight by the Centers for Medicare & Medicaid Services (CMS)--the federal agency that oversees Medicaid--by illuminating needed changes. States are required to submit audits and reports to CMS as a condition for receiving federal funds for their DSH payments. The first set of DSH audits was submitted by states in 2010 and covers states' 2007 DSH payments. The audits give CMS information on how well states are complying with six DSH requirements, including whether payments are limited to hospitals' uncompensated care costs and are accurately calculated. Under a transition period, CMS will not act on audit findings until the 2014 audits are complete; however, findings from GAO's analysis of the 2010 DSH audits show that 44 states will likely need to make changes to their DSH payments to come into compliance. For example,