Audit calls for improved data accuracy in Colorado Medicaid

Suggested Content

DENVER – The Colorado Office of the State Auditor has recommended that state health regulators improve the accuracy and consistency of the data used to determine hospital fees and supplemental payments.

While the Colorado Department of Health Care Policy and Financing (HCPF) is generally in compliance with state and federal law, the audit found, the department could also make several improvements in data accuracy.

The state auditor was required to evaluate the state’s two-year-old Medicaid Hospital Provider Fee Program, a fee assessed on hospitals that in turn allows the state to recoup more federal matching grants to fund an expanded Medicaid program. The per-bed fees and payment programs are part of a larger series of changes that went into effect under Colorado’s 2009 healthcare law, which extended insurance to some 100,000 Coloradans.

The HCPF’s use of self-reported hospital data to determine the fees and supplemental payments has at times been inaccurate and inconsistent, the audit found, in some cases over-charging, which led to the agency ending the 2012 fiscal year with a $24.8 million fund balance. During the 2012 fiscal year, the Medicaid program collected $1.1 billion — $585 million in hospital fees and $528 million in federal matching funds — and paid out $897 million in supplemental provider payments, according to the audit.

“The Department collected significantly more in hospital provider fees than it needed to fund the Program,” the audit said. “The majority of the over collections in the first two years are attributable to the Department’s overestimation of the amount of provider fees needed to fund the expansion populations.”

In other cases, HCPF missed potential mishaps. In one instance, one of the 10 hospitals sampled reported having more than 2000 “Distinct Psychiatric Unit Medicaid patient days” and received $428,000 through the Acute Care Psychiatric treatment supplemental payment program, even though the hospital lacks an eligible distinct psychiatric unit, the audit found.

The audit also found that 24 of the 53 data points reported by hospitals varied by more than 10 percent from similar data points reported for Medicare costs, and three of the 10 hospitals sampled could not provide documentation supporting one or more of the 221 data points reported.

The auditor also recommended that Colorado Medicaid managers give the program’s advisory board quarterly updates on expansion coverage expenditures to ensure that hospital fees aren’t more than needed, and that access to the provider fee database should be restricted to prevent fraud.

Commenting on the surplus the HCPF accumulated through what the audit called over-charges, Julian Kesner, a spokesperson for the Colorado Hospital Association, said: "By law, HCPF cannot use these funds for anything unrelated to the provider fee, so we would hesitate to call it 'over-charging' — the funds are still there to be applied towards the provider fee, even if it's for the future."

Similar Medicaid financing strategies have been adopted by more than 40 states, and about 20 have provider fees. Amid Colorado’s revamped payment system, state health officials are asking for a $100 million increase in Medicaid funding for next year, as the Denver Post reported. In the wake of the Great Recession, some 200,000 Coloradans enrolled in Medicaid, bringing enrollment to about 600,000, or about 12 percent of the state’s population.