Audit of New York State's Medicaid Upper Payment Limits for Non-State Government Inpatient Hospitals and Nursing Homes,'

EXECUTIVE SUMMARY:

This audit was part of a multistate review.  Our objectives were to determine, for State fiscal year (SFY) 2003, whether New York: (1) calculated the category specific UPL for non-State government inpatient hospitals in accordance with Federal regulations and the approved State plan amendment and properly included UPL payments in the calculation of hospital-specific disproportionate share hospital limits, and (2) calculated the category-specific UPL and the transition period excess payment for non-State government nursing homes in accordance with Federal regulations and the approved State plan.  New York did calculate the SFY 2003 category-specific UPL for both hospitals and nursing homes in accordance with requirements and included hospital payments in the disproportionate share hospital limits.  Contrary to Federal regulations, however, New York based its SFY 2003 transition period excess payment, totaling $674.3 million ($337.2 million Federal share), on estimated, rather than actual, Medicaid payment data from the base year.  We expanded our review to include SFYs 2004 and 2005. 

We recommended that New York refund to the Federal Government $43.3 million in overpayments to non-State government nursing homes for SFYs 2003, 2004, and 2005.  In response, New York officials did not specifically address our recommendation or the State's use of estimated, rather than actual, Medicaid data.  However, the officials took exception to our calculation of the overpayment amount.  Our calculation of the transition period excess payments complied with the revised UPL regulations.  We continue to recommend that New York refund the $43.3 million.