You asked a number of questions concerning a provision of Public Act 01-3, June Special Session which allocated an amount of surplus funds to correct underpayments made to Yale-New Haven Hospital as a result of Yale providing incorrect financial information to the Office of Health Care Access (OHCA). Specifically, you want to know (1) what type of error resulted in the underpayment, (2) when was the error discovered, (3) what is the recourse for other hospitals that may have submitted incorrect data, and (4) whether Yale-New Haven Hospital's documentation of its error is available for public review.

SUMMARY

Public Act 01-3, June Special Session allows the state to adjust disproportionate share (DSH) payments to Yale-New Haven Hospital (YNHH) for claims arising out of certain incorrect payments for prior hospital fiscal years. DSH payments are extra Medicaid payments to hospitals with large numbers of indigent and low-income patients for whose care they are not fully compensated. The Department of Social Services (DSS) makes these DSH payments.

PA 01-3, June Special Session, allows DSS, with the approval of OHCA and the Office of Policy and Management (OPM) to make these payments to Yale. YNHH must submit all documentation OHCA determines is needed to finally determine the amounts due the hospital.

The act allocated $ 7 million in surplus funds to correct underpayments to YNHH. A provision of Special Act 01-1, June Special Session decreased the settlement amount to $ 6,856,203.

YNHH identified and explained the filing errors resulting in lower DSH payments in a January 4, 2001 letter to OHCA. An October 2, 2001 OHCA letter details the process YNHH must follow and complete before OPM can release the payment. Yale requested an extension of the due date for filing necessary information with OHCA from October 31, 2001 to January 31, 2002. OHCA granted the extension.

Hospitals, in general, have the opportunity to correct data submissions to OHCA. And these submissions, with certain exceptions, are available for review under the freedom of information law.

BACKGROUND

Section 3(b)(10) of Public Act 01-3, June Special Session allows DSS, within available appropriations and with the approval of OHCA and OPM, to pay final settlement amounts for claims arising out of incorrect payments to YNHH for the fiscal quarter ending September 30, 1998, hospital fiscal year 1999, or both. If an over- or underpayment resulted from the hospital's reporting incorrect information and statistics to OHCA, the act requires OHCA to recompute the payments for those time periods and offset any underpayments by overpayments. The act further requires YNHH to submit all information and documentation that OHCA determines is needed to finally determine the amounts due. Before any funds can be released, the hospital must submit a written release in a form satisfactory to the OPM secretary.

The original dollar amount of the settlement between the state and Yale-New Haven Hospital, according to PA 01-3, June Special Session, was $ 7 million. This amount was adjusted downward by 5. 91% to $ 6,586,203 according to § 47(w) of Special Act 01-1, June Special Session.

TIMING AND NATURE OF THE HOSPITAL'S ERROR

In a letter to OHCA dated January 4, 2001, YNHH raised concerns about its FY 2001 DSH calculation. Yale wrote,

"YNHH's FY 2001 DSH payments have been dramatically reduced by approximately $ 7 million from FY 2000 levels. This decrease represents an almost 20% reduction from YNHH's prior year DSH reimbursement, at a time when statewide, the overall available DSH funds only decreased by 2. 5%...In addition to being very detrimental to YNHH, this decrease in payment appears anomalous and inappropriate given the fact that YNHH's total uncompensated care costs for FY 2001 represent approximately 17. 4% of the total statewide uncompensated care costs, while YNHH's calculated DSH payments for FY 2001 represent only 14. 6% of the statewide expected DSH payments. Based on our analysis, we have determined that two errors were made in the OHCA filings that effected the upper limit calculation and therefore, incorrectly reduced the Hospital's DSH payments for FY 2001. "

These errors are explained in detail in the January 4^th letter. (see Attachment 1) While the uncompensated care data used in the base calculation was correct, these two errors, according to YNHH, "materially impacted the upper limit calculation and therefore, have reduced YNHH's overall DSH payments. "

The first error, according to Yale, occurred in the fourth quarter of FY 1998 when YNHH transferred about $ 5 million of balance sheet reserves to net revenue to properly reflect reserves as of September 30, 1998. Based on the upper limit computation, this use of balance sheet reserves inappropriately reduced the uninsured upper limit calculation by about $ 3. 2 million. YNHH recorded a similar entry in FY 1999.

The second error involved the hospital's installation in FY 1999 of a new patient accounting system which changed the tracking and identifying of payer plans and codes. This change reduced the number of cases previously identified as uninsured that were included in the upper limit calculation. YNHH stated that during the first nine months of FY 1999, cases previously included in the upper limit calculation as uninsured cases were reclassified and erroneously excluded from the upper limit calculation.

SUBSEQUENT ACTIVITY

In an October 2, 2001 letter from OHCA to YNHH, OHCA provided a list of instructions for the hospital to follow and complete in order to meet the requirements of PA 01-3, June Special Session. OHCA wrote, "Upon your submission to the Office of Health Care Access the materials requested in the attached instructions, this office will verify the information contained and advise Secretary Ryan as to payment release" (see Attachment 2).

On October 31, 2001, OHCA received a three-month time extension request from YNHH for submission of the revised report of the independent auditor (one of the required instruction elements). OHCA granted the extension, extending the due date to January 31, 2002. In a November 2, 2001 letter to YNHH, OHCA commented "...please note that the money appropriated to Yale under § 3(b)(10) of Public Act 01-3 (sic) is to be paid from the SFY 2001 surplus. It is to Yale's benefit to supply the required information as soon as possible" (see Attachment 3).

RECOURSE FOR OTHER HOSPITALS

In regard to recourse for other hospitals that may have submitted incorrect data, OHCA staff conduct thorough "desk reviews" of hospital financial filings. According to OHCA, "it is quite common for hospitals to receive several notices of deficiencies from this agency as a result of the desk review process. Many of the deficiencies consist of inconsistent information within the filing or staff questioning of data that is inconsistent with the hospital's previous filings. Hospitals have the opportunity to correct data submissions during the desk review process... However, once OHCA deems a filing complete, it is final from this agency's standpoint" (OHCA letter to OLR, December 31, 2001).

PUBLIC AVAILABILITY OF FILINGS FOR REVIEW

According to OHCA, any correspondence or hospital submission, with the exception of items considered trade secrets and identifiable patient information, is available to the public through the Freedom of Information Act.

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