State officials in Iowa are investigating whether the state Medicaid program overpaid hospitals to the tune of about $10 million for fiscal 2000; if so, the state wants its money back.
The Iowa Hospital Association is cooperating with the inquiry, but "we haven't been convinced that there is an issue, a problem," said Greg Boattenhamer, the association's vice president of government relations. "It would be very much within the realm of possibility that in the calculating of these figures, something has been overlooked and there is no overpayment."
Analysts at the Iowa Department of Human Services have reviewed Medicaid payments dating back to fiscal 1996, said Dennis Headlee, Iowa's Medicaid director. Headlee declined to say how much money is involved; the state estimates the fiscal 2000 overpayment at $10 million, Boattenhamer said.
If the state determines overpayments were made and HCFA agrees, the overpayment amount could be withheld from future Medicaid reimbursements. Iowa spent $1.46 billion on Medicaid in fiscal 2000, which ended last June 30; for this fiscal year, Iowa has budgeted $1.65 billion.
The impact on Iowa's 122 hospitals would be significant, Boattenhamer said, because some rural hospitals rely on Medicaid for as much as 10% to 15% of their revenue and Iowa providers already are strained by Medicare reimbursements that are low relative to other states.
Iowa did the Medicaid calculations to ensure that the state has complied with a federal regulation called the "upper payment limit," Headlee said. The limit requires a state to estimate what it would have paid if it had followed Medicare's payment principles in reimbursing providers for Medicaid and to compare that estimate to what it actually paid. The estimate must be made annually, when a state resets its Medicaid reimbursement rates. The regulation is designed to ensure that the federal government isn't paying too much to a state's providers under its share of Medicaid.
Only inpatient reimbursements seem to be over the limit, Boattenhamer said.
Headlee stressed that the review process is still in its initial phase, with the state's Department of Human Services working with the state's hospital association and providers to see if the initial calculations are correct. "It's really premature to make any comments or draw any conclusions yet," Headlee said.
Boattenhamer said any overpayment may have to do with new staff members at the Department of Human Services, which experienced turnover after 1998, when Gov. Tom Vilsack became the first Iowa Democrat to win that office in nearly three decades. New staff members may have different interpretations of some calculations that go into upper payment limit compliance, Boattenhamer said.
The hospital association was caught off-guard when the state informed it of the inquiry about two weeks ago. "It is a brand-new issue in an environment where there have been no major revisions to the (Medicaid) program," Boattenhamer said. "These calculations have been made in the past without any questions. It's kind of an amazing conclusion for us."