Glossary Term

Supplemental Payments

A Medicaid supplemental payment is a lump sum payment paid by the Medicaid program to a health care provider in addition to Medicaid payments for specific health care services that have been rendered. These payments are largely received by hospitals and include DSH payments, upper payment limit (UPL) payments, uncompensated care pool (UCP) payments, and delivery system reform incentive (DSRIP) payments. By 2019, these payments grew to 17.5 percent of total Medicaid spending and 27 percent of Medicaid spending on hospitals. The growth in supplemental payments increases lobbying with government officials having discretion to award large Medicaid payments, payments consisting mostly or entirely of federal funds. The Government Accountability Office has conducted numerous studies on the problems with supplemental payments, which include a lack of data transparency and inappropriate funding for providers. There are several concerns with supplemental payments: 1) they can be directed to providers based on the political influence of those providers, 2) they are often not distributed in an equitable manner, and 3) they can inappropriately inflate federal spending. 

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