Division of Health Care Finance and Policy - Administration of the Uncompensated Care Pool
DECEMBER 20, 1999 · Read the full official report (PDF) ↗
Published DECEMBER 20, 1999 Audit covers October 1, 1997 – September 30, 1998 Under A. Joseph DeNucci · 1987–2011
source
“Based on our audit, we determined that, except for the matters described in the Audit Results section, the Department of Health Care Finance and Policy has maintained the accounting records of the UCP in accordance with the prescribed requirements and has complied with laws and regulations for those areas we reviewed.”
Read the plain-English breakdown
This is a 1999 state audit of the Uncompensated Care Pool, a Massachusetts fund that reimbursed hospitals and community health centers for eligible care given to people without enough insurance.
“From this trust fund, DHCFP reimburses acute care hospitals and community health care centers for eligible services provided to uninsured and underinsured residents of the Commonwealth.”
The auditor reviewed whether the state had proper controls over eligibility, reporting, payments, revenues, audits, and compliance with laws and regulations.
“The specific objectives of our review were to assess management’s control systems over:”
The fund involved hundreds of millions of dollars and paid for health care for people who otherwise might not be able to afford it, so weak oversight could mean public and hospital money is not handled properly.
“The cost of providing hospital care to the uninsured is a burden on the taxpayers and certain businesses in the commonwealth;”
If you were uninsured or underinsured in Massachusetts at the time, this fund helped pay hospitals and community health centers for eligible medically necessary care.
“Free Care - Unpaid hospital or community health center charges for medically necessary services to (1) patients deemed financially unable to pay, in whole or part, for their care, pursuant to regulations of the DHCFP; (2) uninsured patients who receive emergency care in a hospital emergency room or who receive other hospital care associated with such emergency care services, for which the costs have not been collected after despite reasonable efforts in accordance with DHCFP; and (3) patients in situations of medical hardship in which major expenditures for health care have depleted or can reasonably be expected to deplete the financial resources of the individual to the extent that medical services cannot be paid, as determined by regulations of the DHCFP.”
The big unresolved problem was oversight: the state had not set up enough formal reviews and on-site audits of hospitals and community health centers participating in the fund.
“Our review of controls over the UCP disclosed inadequate controls by DHCFP in the formal scheduling and performance of reviews and on-site audits of the participating hospitals and community health centers.”
The auditor recommended that the division audit all participating hospitals and community health centers and make the audit function more independent.
“Schedule and conduct reviews and or audits of all hospitals and community health centers that receive payments from the Pool.”
This audit was significant because the fund took in about $348 million during the year reviewed, including hospital assessments, surcharges, and federal funds.
“The Commonwealth of Massachusetts transferred $30 million from FFP reimbursement bringing the total sources of funds to $348,236,203 (Exhibit III).”
“Uncompensated care” means free care plus emergency bad debt: care that hospitals or health centers provided but were not paid for, under the report’s rules.
“Uncompensated Care - The sum of reported net free care and net emergency bad debt.”
What the Auditor checked
- Partially Assess management's control systems over eligibility requirements of individuals requesting free care.
- Partially Assess management's control systems over reporting requirements of acute hospitals and community health centers.
- Partially Assess management's control systems over payments from the Uncompensated Care Pool to acute care hospitals and community health centers.
- Complied Assess management's control systems over revenues produced from acute hospital assessments and surcharges.
- Did not comply Assess monitoring and auditing activities by DHCFP over acute hospitals and community health center free care accounts to determine compliance with regulations.
- Partially Determine whether DHCFP addressed prior audit results related to the UCP.
What the Auditor found
Why it matters: DHCFP lacked assurance that only eligible people received Free Care and that costs used to compute Pool payments were proper.
Standard: 114.6 CMR 11.00 and 114.6 CMR 10.00 ( 114.6 CMR 11.00; 114.6 CMR 10.00 )
2 recommendations
- Schedule and conduct reviews and/or audits of all hospitals and community health centers that receive payments from the Pool.agency: agreed
- Remove the audit function from the Pricing Policy and Financial Group and set it up as a more autonomous unit.agency: agreed
Agency response & Auditor reply
Agency: "At the exit conference held on September 28, 1999, the Executive Secretary of the Division of Health Care Finance and Policy indicated that the Division was in agreement with the audit results as presented."
Prior findings revisited
"One hospital, owing $145,235, as of September 30, 1998, paid the liability in full on March 9, 1999."
"One hospital, owing $833,124, is on a quarterly payment plan and is current on payments."
"One hospital, owing $227,087, is delinquent on payment."
"One hospital, owing $3,684,484, closed in 1994 and DHCFP is participating in a legal dissolution of the assets."
"The compliance liabilities for the remaining 19 hospitals have been liquidated."
"Our follow-up review revealed that the criteria for determining eligibility for free care at acute care hospitals and freestanding community health centers have been revised under DHCFP Regulations."
"As a result of these revised regulations, several payment plans were implemented and outstanding liabilities to the UCP have consistently decreased since July 1996."