Weak data, unclear policy plague Medicaid payments: GAO report

Medicaid provider payments are seriously hindered by limited data and “unclear policy,” according to a new report to Congress that calls for greater oversight at numerous government-owned facilities where payments far exceed actual costs.

The report, which examined Medicaid payments to government and private hospitals in Illinois, New York and California, found that the Centers for Medicare & Medicaid Services is hindered by “insufficient information on payments and also by the lack of a policy and process for assessing payments to individual providers.” CMS does not collect provider-specific payment and ownership information, the report says, and also lacks a policy and standard process for determining whether Medicaid payments to individual providers are economical and efficient. Moreover, states must capture but are not required to report, all payments they make to individual institutional providers, the GAO found.

Some of the findings of overpayments were startling.

In Illinois, average daily payments for inpatient services were comparable for government and private hospitals, but the GAO found those numbers “masked wide variations in daily payments for both types of hospitals (between $600 and $10,000 for local government hospitals and $750 to $11,000 for private hospitals). Medicaid payments for six of seven hospitals with high payment levels exceeded their Medicaid costs.

Payments for New York facilities were higher among government hospitals but, like Illinois, average daily payments varied widely ($200 to more $9,000 for local government hospitals and less than $200 to $3,400 for private hospitals). Two were local government hospitals alone received payments exceeding their costs by nearly $400 million, according to the GAO, and three facilities in Illinois and New York had Medicaid payments that exceed their actual total operating costs, including costs associated with all services provided to all patients they served, according to the report.

The report concluded by recommending that CMS take steps to ensure states report provider-specific payment data, establish criteria for assessing payments to individual providers, develop a process to identify and review payments to individual providers, and expedite its review of the appropriateness of New York's hospital payments.