Audit: Data used to determine Medicaid fees questionable

The Colorado Office of the State Auditor said Monday it has found that a model used to calculate government reimbursements to hospitals that serve Medicaid patients is based on data that are not always reliable.

Colorado’s Medicaid Hospital Provider Fee program collects fees from hospitals across the state and uses the dollars to obtain matching federal Medicaid funds.

Then the program uses the money to increase reimbursements to hospitals that provide medical care to Medicaid and Colorado Indigent Care Program patients and other expenditures.

The total amount of fees and reimbursements is determined by federal regulations, but the model determines the portion of the total fees each hospital will pay and receive in reimbursements.

In fiscal 2012, the Medicaid Hospital Provider Fee program collected $1.1 billion, including $585.7 million in hospital provider fees, $528.3 million in federal matching funds and $1 million in interest.

In the same year, the program paid hospitals about $897 million in reimbursements.

The audit found that the program relies on self-reported hospital data to determine hospital provider fee rates and the supplemental payment amounts that hospitals receive.

Auditors classified self-reported hospital information as a “high-risk data source.”

For example, one hospital received a supplemental payment of $428,000 based on its report detailing time spent by patients in a specific type of psychiatric unit.

The hospital, however, was not qualified to receive the supplemental payment because it did not actually have that type of psychiatric unit in its facility.

The full report can be found here under the link “OSA Audit Reports.”

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Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, or

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