Review of Indiana's Medicaid Upper Payment Limits for State Fiscal Years 2001 and 2002

EXECUTIVE SUMMARY:

Our objectives were to determine whether Indiana calculated the upper payment limit (UPL) in accordance with Federal regulations and the approved State plan amendment for: non-State government hospitals (including UPL payments in the calculation of hospital-specific disproportionate share hospital limits) and non-State government nursing homes.  Indiana overstated the amounts available for UPL payments to non-State government hospitals by about $2.2 million for State fiscal year 2001 and by about $4.3 for 2002. The calculations were contrary to State plan provisions because they included unpaid claims rather than Medicaid payments. 

We recommended that Indiana refund $3,173,161 to the Federal Government and revise its UPL methodology to exclude unpaid Medicaid claims from the calculation.  In its reply, Indiana disagreed.