Follow-up review. Indigent Care Trust Fun

Follow-Up Review
Indigent Care Trust Fund
February 2003

Russell W. Hinton, State Auditor Performance Audit Operations Division 254 Washington St. S.W.

Department of Audits and Accounts

Atlanta, GA 30334-8400

This is a Follow-up Review of the Program Evaluation on the Indigent Care Trust Fund, conducted by the Performance Audit Operations Division in December 2000.
Background
The purpose of the federal Disproportionate Share Hospital (DSH) Program and Georgia's Indigent Care Trust Fund (ICTF) is to provide compensation to qualifying hospitals for services provided without charge or for a reduced charge to Medicaid and medically indigent patients. Two additional purposes of the ICTF are to provide primary health care programs for the medically indigent citizens and children of Georgia, and to expand Medicaid eligibility and services. In 1981, federal legislation established the DSH Program. The Georgia General Assembly created the ICTF in 1990, which serves as the conduit for funds between the federal DSH Program and Georgia hospitals. The Georgia Department of Community Health's (DCH) Division of Medical Assistance administers the ICTF.
Synopsis of the Program Evaluation
The primary purpose of the evaluation was to provide an understanding of the status of the ICTF. The program evaluation noted there were 92 hospitals that received ICTF funds during SFY 2000. That number decreased to 89 for SFY 2002. The locations of those hospitals receiving ICTF funds in SFY 2002 are shown in Exhibit 1 on page 2. The evaluation also identified the sources and beneficiaries of ICTF funds during SFY 2000. An update of the receipts and expenditures of the ICTF during SFY 2002 is provided in Exhibit 2 on page 3.
The evaluation noted that DCH was improving its administration of the ICTF. In particular, DCH had consolidated various financial surveys in order to reduce the reporting burden on hospitals and was working towards implementing an independent accountant's attestation requirement to confirm the accuracy of the financial data reported in the surveys. Furthermore, the evaluation noted that DCH was working to ensure that hospitals were complying with regulations governing hospitals' primary care plans as well as notifying the public about the hospitals' participation in the ICTF.

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The original evaluation also identified areas where action should be taken to improve the Program's effectiveness and efficiency. These areas are discussed in the following section.

Exhibit 1 Indigent Care Trust Fund Participating Hospital Locations
State Fiscal Year 2002

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Source: Department of Community Health records

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Indigent Care Trust Fund

Exhibit 2 Georgia's Indigent Care Trust Fund State Fiscal Year 2002

$2,922,859 Other Funds: Interest Earned, Ambulance
License Fees, Other

Georgia's Indigent Care Trust Fund
(ICTF)
$500,004,540

$300,157,644

Federal Funds provided a match to the

as

intergovernmental transfers

and other receipts.

Medicaid Eligibiliity Expansion, DHR
Programs, Ambulance Rate
Change, Administration, Other Expenditures
$66,497,015

Total: $433,507,525

20 Qualified

Total ICTF paymenttos

Disproportionate Share qualifying hospitals.

Private Hospitals Does not include DSH

$39,338,493

intensity payments

$196,924,037 Intergovernmental transfers provided

by the public

hospital authorities

and other

69 Qualified

government entities.

Disproportionate Share

Public Hospitals

$394,169,032

Primary Care $65,026,129

15% of ICTF payments to hospitals are to be used for Primary Care services which are provided by the hospitals, the Division of
Public Health of the Dept. of Human Resources, and/or other community organizations.

Note: Some of the above expenditures are estimates and are subject to change due to continuing ICTF activity for SFY 2002. These amounts are stated as reported by DCH in December 2002 and are unaudited.
Source: ICTF records and interviews with program personnel.

Evaluation Issues and Findings
Finding (as reported in 2000): DCH has taken steps to improve ICTF administration. Proposed changes should increase oversight of the use of ICTF funds and continue to improve program administration. Current Status: DCH contracted in December 2000 with the Department of Audits, Healthcare Audits Division to examine financial data reported by hospitals as well as to review hospitals' primary care plan expenditures. The reviews performed by the Healthcare Audits Division in 2002 revealed non-compliance by some participating hospitals in their reporting of primary care plan expenditures and in following procedures related to unexpended primary care funds. DCH needs to continue to work with participating hospitals to insure their compliance with the requirements as set forth in the ICTF Rules.
The program evaluation also stated DCH was in the process of instituting a requirement for each hospital to have an independent accountant attest to the accuracy of the data it reports to DCH in

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the Hospital Financial Survey (HFS). DCH has not yet implemented this requirement although program personnel expected this new procedure to be in place by May 2003.
Finding (as reported in 2000): DCH has begun work to ensure that hospitals are complying with their primary care plans. Current Status: DCH has established an agreement with the Department of Audits, Healthcare Division to perform agreed upon procedures including the examination of hospitals' primary care plan expenditures. The reviews performed by the Healthcare Audits Division in 2002 revealed non-compliance by some participating hospitals in their reporting of primary care plan expenditures and in following procedures related to unexpended primary care funds. DCH needs to continue to work with participating hospitals to insure their compliance with the requirements as set forth in the ICTF Rules.
DCH is also developing a requirement that hospitals have an independent accountant attest to the accuracy of financial information, including primary care plan expenditures. In addition, DCH is drafting a new appendix to the hospital policy manual to provide more detailed information about ICTF requirements, including primary care plan expenditures. DCH personnel expected these new procedures and appendix to be formally adopted in early 2003.
Finding (as reported in 2000): Coordination of the hospitals' primary care plans with other state programs is accomplished primarily at the local level with limited direction from DCH. Current Status: DCH does not currently participate in the process of hospitals' developing and coordinating primary care projects with local providers. However, DCH does determine what primary care projects are acceptable, DCH reviews and approves hospital primary care plans with the assistance of DCH's Office of Rural Health Services, and DCH requires that these hospitals use no less than 15% of their ICTF funds for primary care services.
Finding (as reported in 2000): ICTF participating hospitals are required to provide effective notification of their participation in the ICTF to the public and to inform DCH of how the notification will be accomplished. DCH is working to ensure hospitals' compliance with the requirement. Current Status: DCH has established an agreement with the Department of Audits, Healthcare Division to perform agreed upon procedures, which includes examining hospitals' public notification procedures. The reviews performed by the Department of Audits, Healthcare Division at the end of calendar year 2002 indicate that, generally, hospitals examined were in compliance with these requirements. DCH is also developing a new appendix to the hospital policy manual to provide more detailed information about ICTF requirements, including public notification procedures. The new appendix is expected to be formally adopted in early 2003.
Finding (as reported in 2000): Health studies directly relating to the impact of the ICTF on the health care of indigents were not found. Current Status: In July 2001, the Georgia Health Policy Center of Georgia State University entered into an agreement with DCH to perform a "three-year study of hospitals' uses of the required 15% commitment of ICTF monies to primary care programs." The study is due to be completed by the end of 2003, at which time a full report will be submitted to DCH.

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For additional information or to request a copy of the original report, please contact Paul E. Bernard, Director, Performance Audit Operations Division, at 404-651-8855.
Or see our website: www2.state.ga.us/Departments/AUDIT/pao/pao_main.htm

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