The Government Accountability Office (GAO) recently released a report on state Medicaid supplemental payments during fiscal year (FY) 2010. According to the report, states reported $32 billion in Medicaid supplemental payments for FY 2010. GAO notes in the report, however, that as a result of incomplete state reporting on Medicaid supplemental payments, it was unable to determine the exact amount of such payments. GAO further notes that in FY 2010, federal and state Medicaid costs totaled approximately $383 billion and that, as Medicaid continues to expand, “better information” is needed in order to manage the program.

In addition to standard Medicaid payments, states make supplemental payments to Medicaid providers, which include a significant federal component. GAO classifies Medicaid supplemental payments into the following two general categories:

  1. Disproportionate Share Hospital (DSH) Payments: Payments made to hospitals that serve a disproportionate share of low-income and Medicaid beneficiaries; and
  2. Non-DSH Supplemental Payments: Other supplemental payments that states make under Medicaid Upper Payment Limit (UPL) regulations.

According to GAO’s report, of the reported $32 billion in Medicaid supplemental payments in FY 2010, $17.6 billion was for DSH payments and $14.4 billion was for non-DSH supplemental payments. GAO further states that non-DSH supplemental payments were more than $8 billion higher during FY 2010 than FY 2006 (in 2008, GAO issued a report on Medicaid supplemental payments during FY 2006). GAO concludes in the report that “transparency and accountability” of Medicaid supplemental payments is lacking and that enhanced reporting of Medicaid supplemental payments is needed.

To view GAO’s report click here.