The federal government is requiring retrospective audits of state Medicaid Disproportionate Share (DSH) payments to confirm the amounts were properly paid to hospitals in Montana.

Federal law establishes an annual DSH allotment for each state that limits Federal Financial Participation (FFP) for total statewide DSH payments made to hospitals. Federal law also limits FFP for DSH payments through the hospital-specific DSH limit.

Under the hospital-specific DSH limit, FFP is not available for state DSH payments that are more than the hospital's Eligible Uncompensated Care Cost, which is the cost of providing inpatient hospital and outpatient hospital services to Medicaid patients and the uninsured, minus payments received by the hospital on or on the behalf of those patients.

Beginning for State Plan Rate Year 2011 DSH audits and reports, CMS will regard audit findings demonstrating DSH payments that exceed the hospital-specific DSH limits as representing discovery of overpayments to providers.

The concern with the audits is that the treatment of the hospital provider tax is not clearly defined. It is not known if the auditors are including or excluding this tax in determining the amount reported for HRA supplemental payments.

For additional information or questions, please contact your Eide Bailly representative or Marie White at 612-253-6546.