Medicaid:

Disproportionate Share Hospital Payments to Institutions for Mental Diseases

HEHS-97-181R: Published: Jul 15, 1997. Publicly Released: Jul 15, 1997.

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GAO provided information on disproportionate share hospital (DSH) programs that provide funds to institutions for mental diseases in selected states.

GAO noted that: (1) its work to date indicates that the 1993-1995 growth in mental health DSH payments pre dates full implementation of the hospital-specific caps mandated by the Omnibus Budget Reconciliation Act (OBRA) of 1993; (2) in 1996, both total and mental DSH expenditures declined significantly as the full impact of the hospital-specific caps took effect; (3) in addition, the growth in mental health DSH expenditures that occurred before 1996 appears, at least in some cases, to be a shifting of DSH payments from one type of public hospital to another as OBRA DSH requirements became effective; (4) in Michigan, for example, about $571 million, or over 92 percent, of the almost $618 million in DSH adjustments paid to hospitals in 1994 went to the University of Michigan Hospital; (5) in 1995, however, OBRA limited payments to this hospital to about $53 million, a $518-million decrease; (6) meanwhile, DSH payments to state-operated psychiatric hospitals increased by about $303 million; (7) although mental health DSH payments declined in 1996, they continued to represent a significant portion of states' total DSH expenditures; and (8) in the states GAO contacted where hospitals received mental health DSH payments, those hospitals on average received substantially higher DSH payments than other hospitals participating in the DSH program.

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