Review Of The Methodology For Calculating The Upper Payment Limit For Inpatient Hospitals By The Massachusetts Office of Medicaid For State Fiscal Year 2003

EXECUTIVE SUMMARY:

At CMS' request, we reviewed the Massachusetts Office of Medicaid (the State agency) upper payment limit (UPL) calculation for inpatient hospital services for state fiscal year (SFY) 2003.  Our objectives were to determine whether the State agency calculated the UPL for acute care inpatient hospitals in accordance with Federal regulations, and properly included UPL payments in the calculation of hospital-specific disproportionate share hospital limits.  The State agency's methodology to calculate the inpatient UPL for SFY 2003 was not in complete agreement with the revised regulations issued by CMS and the state plan.  For example, the State agency did not include all hospital inpatient providers in the calculation or use the most accurate Medicaid claims payment data available as a basis for its UPL calculation.

We recommended that the State agency work with CMS to ensure that the SFY 2003 inpatient UPL calculation includes all hospital inpatient providers, and uses the most accurate Medicaid payment data rather than estimates throughout the calculation.  In comments to our report, the State agency agreed that all hospitals should be included in the UPL calculation, but did not agree that actual Medicaid paid claims data are required as the basis for the UPL calculation.

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