The Iowa Medicaid program didn't overpay hospitals by $11 million in fiscal 2000 after all.
Five months ago, hospital administrators were worried that overpayments flagged by an initial state analysis would be deducted from future reimbursements (Jan. 22, p. 12).
The supposed shortfall came to light during the state's annual "upper payment limit analysis," which federal law requires from each state Medicaid program.
The upper payment limit is equal to what Medicare would have paid for the same set of claims, but the law allows several methods for analyzing the data. If a state's Medicaid payments exceed the upper payment limit, HCFA can seek return of the federal share of the payments.
The Iowa Hospital Association pushed the state Department of Human Services to make other estimates, and the association and the state eventually settled on three additional methods. Health Management Associates, a Lansing, Mich.-based consulting firm, ran the calculations.
In a June 1 letter, HCFA's regional office in Kansas City, Mo., told Iowa that the other methods were acceptable and that the state was in compliance for fiscal 1999 and 2000. Iowa's fiscal year runs from July 1 to June 30.
"We worked collaboratively from day one. There was no controversy," said Greg Boattenhamer, vice president of government relations for the hospital association.
State Medicaid director Dennis Headlee concurred, saying, "We went through that process with the cooperation and assistance of the hospital association."
In future years, Headlee said, the state will use a method based on prospective payment, which HCFA found to be in compliance.
If that method shows that the state is close to the upper payment limit, Headlee said, more analyses will follow to ensure that the state isn't violating the law. The initial analysis of fiscal 2000 by the state used a cost-based methodology.