Audit of New York State's Medicaid Upper Payment Limits for Non-State Government Inpatient Hospitals

DEPARTMENT OF HEALTH & HUMAN SERVICES Office of Inspector General Washington, D.C. 20201 OCT 1 4 2C05 Mark B. McClellan, M.D., Ph.D. TO: Administrator Centers for Medicare & Medicaid Services FROM: Daniel R. Levinson Inspector General SUBJECT: Audit of New York State's Medicaid Upper Payment Limits for Non-State Government Inpatient Hospitals and Nursing Homes (A-02-03-01021) Attached is an advance copy of our final report on New York State's upper payment limits (UPLs) for non-State government inpatient hospitals and nursing homes. We will issue this report to the New York Medicaid agency within 5 business days. Our audit was part of a multistate review of UPL calculations. The UPL is an estimate of the amount that would be paid for Medicaid services under Medicare payment principles. In 2001, the Centers for Medicare & Medicaid Services (CMS) revised Medicaid's UPL regulations to require that States calculate a separate UPL for each of the following categories of providers: private facilities, State facilities, and non-State government facilities. The regulations also created transition periods in which eligible States were allowed to make payments up to the category-specificUPL plus an excess amount, which is calculated based on the portion of Medicaid payments that exceeded the UPL in the applicable base year. Federal funds are not available for State expenditures that exceed these limits. Under the terms of New York's CMS-approved ...