April 1, 2009

Review of Pennsylvania's Determination of Medicaid Disproportionate Share Hospital Eligibility for the State-Operated Institutions for Mental Diseases (A-03-08-00203)

This report found that the Pennsylvania Department of Public Welfare (DPW) did not fully comply with its state plan and federal requirements in determining whether state-operated institutions of mental disease were eligible for Medicaid payments in fiscal year 2008-2009. DPW included some patient days related to unallowable age groups and inmates held in institutions by the state's criminal justice system.

Institutions for Mental Diseases (IMD) may be eligible for DSH payments to recoup the unreimbursed costs of providing inpatient care to patients who are either Medicaid eligible or uninsured. Section 1923(d)(3) of the Social Security Act and Attachment 4.19-A of the approved State plan require that IMDs have a Medicaid inpatient utilization rate (MIUR) of not less than 1 percent to be deemed a Medicaid DSH. IMDs that have an MIUR of at least 1 percent are eligible for DSH payments. Medicaid days associated with unallowable inpatients cannot be included in the MIUR calculation. Section 1905(a) of the Act defines unallowable IMD patients as residents under age 65, except for inpatient psychiatric services provided to individuals under the age of 21. CMS further clarified that individuals who are inmates of correctional facilities are also unallowable. In addition, the State plan requires State-operated IMDs to have a low-income utilization rate (LIUR) in excess of 25 percent to be eligible for a DSH payment.