States' use of medicaid UPL and DSH financing mechanisms

Health Affairs

Volumn 23, Issue 2, 2004, Pages 245-257

  Coughlin, Teresa A ^a   Bruen, Brian K ^b   King, Jennifer ^b  

^a URBAN INSTITUTE   (United States)

^b NONE

Author keywords

[No Author keywords available]

Indexed keywords

GOVERNMENT; HEALTH CARE POLICY; HEALTH PROGRAM; HOSPITAL; HUMAN; MEDICAID; REVIEW; SIMULATION;

EID: 1842729464     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.23.2.245     Document Type: Review

References (39)

1. U.S. General Accounting Office, Medicaid: States Use Illusory Approaches to Shift Program Costs to Federal Government, Pub. no. GAO/HEHS-94-133 (Washington: GAO, 1994); and T. Coughlin and D. Liska, "The Medicaid DSH Payment Program: Background and Issues," Assessing the New Federalism: Issues and Options, Series 5, no. A-14 (Washington: Urban Institute, 1997).
2. U.S. General Accounting Office, Medicaid: States Use Illusory Approaches to Shift Program Costs to Federal Government, Pub. no. GAO/HEHS-94-133 (Washington: GAO, 1994); and T. Coughlin and D. Liska, "The Medicaid DSH Payment Program: Background and Issues," Assessing the New Federalism: Issues and Options, Series 5, no. A-14 (Washington: Urban Institute, 1997).
3. Congressional Budget Office, "CBO March 2002 Baseline: Medicaid and State Children's Health Insurance Program Fact Sheet" (Washington: CBO, 23 April 2002).
4. See, for example, L.S. Gage, "Statement of National Association of Public Hospitals to Congress Staff, DHHS Proposed Rule on Medicaid Upper Payment Limits" (Washington: National Association of Public Hospitals, 11 December 2001).
5. See, for example, L. Ku, "Limiting Abuses of Medicaid Financing: HCFA's Plan to Regulate the Medicaid UPL" (Washington: Center on Budget and Policy Priorities, 27 September 2000).
6. See, for example, Ibid.; and U.S. Department of Health and Human Services, Office of Inspector General, Review of Medicaid Enhanced Payments to Local Public Providers and the Use of Intergovernmental Transfers, Pub. no. A-03-00-00216 (Washington: HHS OIG, 2001).
7. See, for example, Ibid.; and U.S. Department of Health and Human Services, Office of Inspector General, Review of Medicaid Enhanced Payments to Local Public Providers and the Use of Intergovernmental Transfers, Pub. no. A-03-00-00216 (Washington: HHS OIG, 2001).
8. Ku, "Limiting Abuses of Medicaid Financing."
9. L. Ku and T. Coughlin, "Medicaid Disproportionate Share and Other Special Financing Programs," Health Care Financing Review 16, no. 3 (1995): 27-54; and T. Coughlin, L. Ku, and J. Kim, "Reforming the Medicaid Disproportionate Share Program in the 1990s," Health Care Financing Review 22, no. 2 (2000): 137-157.
10. L. Ku and T. Coughlin, "Medicaid Disproportionate Share and Other Special Financing Programs," Health Care Financing Review 16, no. 3 (1995): 27-54; and T. Coughlin, L. Ku, and J. Kim, "Reforming the Medicaid Disproportionate Share Program in the 1990s," Health Care Financing Review 22, no. 2 (2000): 137-157.
11. J. Holahan et al., "Explaining the Recent Growth in Medicaid Spending," Health Affairs (Fall 1993): 178-193; and Coughlin and Liska, "The Medicaid DSH Payment Program."
12. J. Holahan et al., "Explaining the Recent Growth in Medicaid Spending," Health Affairs (Fall 1993): 178-193; and Coughlin and Liska, "The Medicaid DSH Payment Program."
13. GAO, Medicaid: States Use Illusory Approaches; and Ku and Coughlin, "Medicaid Disproportionate Share."
14. GAO, Medicaid: States Use Illusory Approaches; and Ku and Coughlin, "Medicaid Disproportionate Share."
15. Medicaid imposes the Medicare UPL, which stipulates that Medicaid payments can be no higher than the amount that Medicare would pay for the same service. However, whether payments exceed the limit is based on the aggregate amount that can be paid to an entire class of providers, assuming that every provider in that class was paid Medicare rates for all services provided to Medicaid beneficiaries.
16. Ku, "Limiting Abuses of Medicaid Financing."
17. HHS OIG, Review of Medicaid Enhanced Payments; and GAO, Medicaid: State Financing Schemes Again Drive up Federal Payments, Pub. no. GAO/T-HEHS-00-193 (Washington: GAO, 2000).
18. HHS OIG, Review of Medicaid Enhanced Payments; and GAO, Medicaid: State Financing Schemes Again Drive up Federal Payments, Pub. no. GAO/T-HEHS-00-193 (Washington: GAO, 2000).
19. CBO, "CBO March 2002 Baseline."
20. In making this estimate, we include California's supplemental payments made through its Selective Contracting Program. See Exhibit 1 notes for more details.
21. While the survey asked about UPL and DSH programs in 2001 and 2002, our report focuses on 2001, as several states did not have final 2002 spending estimates at the time of our survey.
22. Because of incomplete surveys, the $10.7 billion figure excludes all DSH payments made by Kansas and Oregon's DSH payments to mental hospitals.
23. In general, only a limited amount of general, non-DSH, Medicaid payments are made to mental hospitals. By law, Medicaid does not pay for inpatient psychiatric care of adults ages 21-64. However, beginning in the 1990s many states began making large DSH payments to mental hospitals. Medicaid DSH payments to mental hospitals are now limited by law. See also GAO, Medicaid: DSH Payments to State Psychiatric Hospitals, Pub. no. GAO/HEHS-98-52 (Washington: GAO, 1998).
24. Some states take in more revenue through their DSH programs than they pay out in DSH payments. This additional revenue, which we have called "general state gains," is a way for states to gain through DSH.
25. See GAO, Medicaid: States Use Illusory Approaches; Ku and Coughlin, "Medicaid Disproportionate Share"; and Coughlin et al., "Reforming the Medicaid Disproportionate Share Program."
26. See GAO, Medicaid: States Use Illusory Approaches; Ku and Coughlin, "Medicaid Disproportionate Share"; and Coughlin et al., "Reforming the Medicaid Disproportionate Share Program."
27. See GAO, Medicaid: States Use Illusory Approaches; Ku and Coughlin, "Medicaid Disproportionate Share"; and Coughlin et al., "Reforming the Medicaid Disproportionate Share Program."
28. Ku, "Limiting Abuses of Medicaid Financing."
29. The one major exception to use of local funding for the state Medicaid share is New York, which requires counties to contribute 28-50 percent of the nonfederal share for most Medicaid services. See U.S. Advisory Commission on Intergovernmental Relations, Local Government Responsibilities in Health Care (Washington: ACIR, July 1994); GAO, Medicaid: States Use Illusory Approaches; Coughlin and Liska, "The Medicaid Disproportionate Share Hospital Payment Program"; HHS OIG, Review of Medicaid Enhanced Payments; and HHS OIG, Reviews Indicate that an Increase in Medicaid Disproportionate Share Hospital Payments to 175 Percent of Uncompensated Care Cost May Not Be Warranted, Pub. no. A-06-01-00069 (Washington: HHS OIG, 2001).
30. The one major exception to use of local funding for the state Medicaid share is New York, which requires counties to contribute 28-50 percent of the nonfederal share for most Medicaid services. See U.S. Advisory Commission on Intergovernmental Relations, Local Government Responsibilities in Health Care (Washington: ACIR, July 1994); GAO, Medicaid: States Use Illusory Approaches; Coughlin and Liska, "The Medicaid Disproportionate Share Hospital Payment Program"; HHS OIG, Review of Medicaid Enhanced Payments; and HHS OIG, Reviews Indicate that an Increase in Medicaid Disproportionate Share Hospital Payments to 175 Percent of Uncompensated Care Cost May Not Be Warranted, Pub. no. A-06-01-00069 (Washington: HHS OIG, 2001).
31. The one major exception to use of local funding for the state Medicaid share is New York, which requires counties to contribute 28-50 percent of the nonfederal share for most Medicaid services. See U.S. Advisory Commission on Intergovernmental Relations, Local Government Responsibilities in Health Care (Washington: ACIR, July 1994); GAO, Medicaid: States Use Illusory Approaches; Coughlin and Liska, "The Medicaid Disproportionate Share Hospital Payment Program"; HHS OIG, Review of Medicaid Enhanced Payments; and HHS OIG, Reviews Indicate that an Increase in Medicaid Disproportionate Share Hospital Payments to 175 Percent of Uncompensated Care Cost May Not Be Warranted, Pub. no. A-06-01-00069 (Washington: HHS OIG, 2001).
32. The one major exception to use of local funding for the state Medicaid share is New York, which requires counties to contribute 28-50 percent of the nonfederal share for most Medicaid services. See U.S. Advisory Commission on Intergovernmental Relations, Local Government Responsibilities in Health Care (Washington: ACIR, July 1994); GAO, Medicaid: States Use Illusory Approaches; Coughlin and Liska, "The Medicaid Disproportionate Share Hospital Payment Program"; HHS OIG, Review of Medicaid Enhanced Payments; and HHS OIG, Reviews Indicate that an Increase in Medicaid Disproportionate Share Hospital Payments to 175 Percent of Uncompensated Care Cost May Not Be Warranted, Pub. no. A-06-01-00069 (Washington: HHS OIG, 2001).
33. The one major exception to use of local funding for the state Medicaid share is New York, which requires counties to contribute 28-50 percent of the nonfederal share for most Medicaid services. See U.S. Advisory Commission on Intergovernmental Relations, Local Government Responsibilities in Health Care (Washington: ACIR, July 1994); GAO, Medicaid: States Use Illusory Approaches; Coughlin and Liska, "The Medicaid Disproportionate Share Hospital Payment Program"; HHS OIG, Review of Medicaid Enhanced Payments; and HHS OIG, Reviews Indicate that an Increase in Medicaid Disproportionate Share Hospital Payments to 175 Percent of Uncompensated Care Cost May Not Be Warranted, Pub. no. A-06-01-00069 (Washington: HHS OIG, 2001).
34. Such payments do not remain with state providers. See GAO, Michigan Financing Arrangements, Pub. no. GAO/HEHS-95-146R (Washington: GAO, 1995); and GAO, Medicaid: DSH Payments to State Psychiatric Hospitals.
35. Such payments do not remain with state providers. See GAO, Michigan Financing Arrangements, Pub. no. GAO/HEHS-95-146R (Washington: GAO, 1995); and GAO, Medicaid: DSH Payments to State Psychiatric Hospitals.
36. None of the reporting states used revenues from private sources for their UPL programs in 2001.
37. 2] x 0.45. State and national per capita income figures are based on the three most recent calendar years for which data are available from the Department of Commerce.
38. While our survey accounts for a sizable share of DSH and UPL spending, we acknowledge that it has important shortcomings that could bias our results. For one, we rely on data reported by state officials. In addition, several states did not respond to the survey, including Illinois, New York, and Pennsylvania - three large states known to have well-developed DSH and UPL programs.
39. Several states have sought Medicaid waivers to "redirect" DSH payments away from hospitals and use funds to expand Medicaid coverage to the uninsured instead. 257