HHS' inspector general's office found during an audit that New Jersey wrongly claimed $50 million in federal Medicaid disproportionate-share hospital payments related to five hospitals during state fiscal years 2003-07.
The hospitals did not qualify for the payments because they did not have the minimum number of Medicaid patients required of the DSH program, which is calculated through what is known as the Medicaid inpatient utilization rate, according to the inspector general's office report (PDF). That rate should be at a minimum of 1% and is calculated by dividing the number of inpatient days attributable to Medicaid-eligible patients into a hospital's total inpatient days for that year.
The state partially agreed with the inspector general’s office recommendation to pay back $50 million but contended that it owed only $3.5 million. It did not indicate agreement or disagreement with its recommendation that the state ensure all hospitals designated as DSH facilities meet eligibility requirements, according to the report.