The Government Accountability Office (GAO) recently examined the extent to which federal government payments to hospitals for uncompensated care aligned with hospital costs. This federal support, which totaled nearly $50 billion annually in FYs 2013 and 2014, mainly came in the form of Medicare and Medicaid payments to hospitals (about $14 million in Medicare payments and $35 million in Medicaid payments). According to the GAO’s analysis, Medicare’s Uncompensated Care (UC) payments are not well aligned with hospital uncompensated care costs because (1) payments are largely based on hospitals’ Medicaid workload rather than actual hospital uncompensated care costs, and (2) CMS does not account for hospitals’ Medicaid payments that offset uncompensated care costs. The GAO therefore recommends that CMS: (1) better align Medicare UC payments with hospital uncompensated care costs; and (2) account for Medicaid payments made when making Medicare UC payments to individual hospitals. HHS concurred with the GAO’s recommendations (note that the final FY 2017 Medicare inpatient prospective payment system rule discusses future plans to incorporate new data into the computation of hospitals’ uncompensated care costs). For details, see the full report, “Hospital Uncompensated Care: Federal Action Needed to Better Align Payments with Costs.”