A federal advisory panel for Medicaid wants HHS to better monitor Medicaid's biggest supplemental payment program for hospitals after finding that states have been overspending by billions.
The Medicaid and CHIP Payment and Access Commission found that 17 states overspent on so-called upper payment limit, or UPL, funds by $2.2 billion in fiscal 2016. These supplemental payments primarily go to hospitals, although they can also be made to nursing homes, physicians and other clinicians.
The overpayments accounted for nearly 17% of the total spending. In fiscal 2017, the government paid out $13.1 billion in these supplemental funds but MACPAC analysts said there is no data on how that money was spent.
Commissioner Dr. Kit Gorton called the finding a "compelling chapter for why things should change in a fairly major way" and said it shows some states are likely using the program as an "unneeded piggy bank."
"Given the size of this spend, and the lack of accountability, what I come to is: we should recommend very heady stuff," Gorton said.
States base the upper-payment-limit supplement for Medicaid fee-for-service rates on what Medicare would have paid for same treatment. If the base payments for hospitals fall below the Medicare base, they can make up for it with these supplemental funds.
But MACPAC's analysis found that HHS doesn't have a system to check that states' estimates and payments are accurate, so the commission is weighing draft recommendations to remedy that.
Draft proposals, which will be finalized next month, included a new system for HHS to check states' financial activity and make sure the hospital payment data is accurate. The CMS could then claw back any overpayments. HHS should also release the hospital payment data, the draft recommendation said.
In their comments, the commissioners unanimously agreed that the CMS needs to get a better handle on the program.
"The recommendations are a good start and won't be where we end," said Commissioner Darin Gordon, who questioned whether hospitals may double up on disproportionate-share payments and these supplemental funds.
Commissioner Alan Weil described the issue as being, "like many in Medicaid," a practical aberration of a good concept.
"I would like to be sober and cautious because I don't think we know what's going on here," Weil said. "I don't want to sound an alarm, I want to figure out what's going on. It may drive us to suggest a different way of thinking about UPL."
