ICTF/DSH/UPL
· The Georgia Indigent Care Trust Fund (ICTF) was created through amendment of the Georgia constitution. The ICTF primarily makes disproportionate share hospital (DSH) payments to eligible providers. DSH payments (partially) reimburse providers for their unreimbursed Medicaid and uninsured patient costs. The Trust Fund also provides grants for infrastructure development and uninsured demonstration projects. The Trust Fund has also supported research efforts of the Georgia Health Policy Center
· The Trust Fund is fully financed through public provider payments-intergovernmental transfers (IGTs). Public hospitals intergovernmentally transfer 50% of their gross DSH/ICTF payments.
· DHS payments in the aggregate are limited by federal law. Georgia’s aggregate DSH limit in SFY 2002 was approximately $400 million.
· DSH payments are also capped at the individual hospital level. A hospital may not receive DSH payments greater than the sum of it costs of care to Medicaid patients and patients without health insurance minus non DSH Medicaid payments and any self-pay amounts.
· Hospitals in Georgia qualify for DSH payments based upon one or more state-defined criteria. For example, a regional perinatal center is automatically a DSH hospital. In addition, a hospital meeting either of two federal criteria is deemed to be a DSH hospital:
o A hospital with a Medicaid utilization rate greater than one standard deviation above the mean rate for all Medicaid providers is a DSH; or
o A hospital with a low income utilization rate greater than 25% is a DSH.
· A hospital receives DSH payments based upon its DSH cap relative to all other hospitals’ DSH caps. In SFY 2002, the sum of DSH caps totaled approximately $600 million. Since only $400 million dollars was available, hospitals were reimbursed for approximately two-thirds of their unreimbursed costs.
· Thus, as an example:
o Hospital’s unreimbursed Medicaid costs $20 million
o Uninsured care costs $25 million
Total Cap $45 million
Reduction to Comply with Aggregate Limit $15 million
Gross ICTF/DSH Payment $30 million
Required IGT $15 million
NET ICTF/DSH Payment $15 million
% of Unreimbursed Care Paid by ICTF 33 percent
· DSH hospitals are also required to spend 15% of their GROSS payments on primary care projects. Thus in the example above, the hospital would be required to spend $4.5 million on approved primary care projects. Thus the amount of funds unrestricted and available to cover ureimbursed care would be $11.5 million or approximately 25% of unreimbursed care costs.
· Georgia has also implemented a so-called “upper payment limit” program. Based upon current federal regulations, Medicaid can reimburse public providers for up to 150% of the amount Medicare would pay for similar services. Thus for example:
o Hospital Medicaid Costs $50 million
o Medicare payment rate $60 million
o @ 150% $90 million
Accordingly, in this example, the provider would make a “profit” of $40 million. It is important to note however that this “profit” would have to be included in the calculation of its DSH cap.
· During calendar year 2001, Medicaid made approximately $300 million in UPL payments. In order to receive these payments, participating hospitals were required to make approximately $215 million in intergovernmental transfers. In others words, the State “recouped” 83% of the new federal matching payments through IGTs. After accounting for the IGTs, hospitals were reimbursed for less than 50% of their unreimbursed costs.
· Federal rules to become effective March 19 reduce the 150% UPL TO 100%. This will obviously limit payments to providers and the amount retained by the State
· In its SFY 2003 budget, the Department has included $62 million in UPL-related IGTs. Based upon our best information, there are approximately $92 million in IGTs available based upon the current funding arrangement. House budget committee members have developed a plan to spend approximately $16 million of this additional $30 million.