AUGUSTA – The inspector general’s office of the U.S. Department of Health and Human Services has found that the state improperly accounted for Medicaid payments for school-based health services and wants $3 million returned to the federal treasury.
“Because the state agency (the Maine Department of Health and Human Services) did not follow Federal regulations, it was overpaid Federal funds totaling $8,804,013,” wrote Michael Armstrong, regional inspector general for Audit Services. However, he added, that amount was reduced to an overpayment of $3,044,211 after discussions with the state.
The audit also found the state agency “did not follow procedures to ensure that it adequately accounted for federal Medicaid claims” and cited the state for not crediting the Medicaid program with uncashed checks that instead were deposited in the state’s General Fund to help balance the state budget. The audit covered the period January 2001 to June 2003.
“We recommend the state agency refund the $3,044,211 to the Federal Government and follow prescribed procedures to ensure the state properly refunds the Federal share for un-cashed or voided checks in accordance with Federal requirements,” Armstrong wrote.
The initial report was first given to the state last summer for comment. This final audit report was sent to the state Jan. 18 and was released by the inspector general’s office Feb. 2.
State Controller Ed Karass agreed that improper procedures were used in handling the checks. He wrote to federal officials, assuring them that checks will be handled properly in the future.
“The method by which we billed the school-based rehab services to the schools and recovered the money was certainly not appropriate from an accounting standpoint,” he said in an interview. “As you know, over the last couple of years we have been working with the department to correct a lot of problems with their accounting methodology.”
But, Karass is disputing the federal audit finding that the state owes the federal government $3 million. He said the state acted within federal laws and regulations in retroactively providing for increases in the rates paid schools for the services.
Armstrong disagrees and expects the state to pay back the overpayment. The dispute centers on federal officials’ contention that the fees need to be based on actual Medicaid cost data. The state rejects that position.
“The state can find no basis in Federal regulation for the assertion that the state must base fee increases for school-based rehab services on actual Medicaid cost data,” Karass said.
The state is providing a fee increase of 8 percent retroactively to school districts, he said. The rates had not been adjusted for several years, he said.
“The department may provide for fee increases for SBR services, as it does for any other type of service covered under Medicaid,” Karass said.
But, Karass acknowledged, while the state is seeking to negotiate a solution to the dispute, the federal government may simply deduct what it thinks is due from a future Medicaid payments, creating a hole in the state budget.
“If that happens, obviously the department will have to search for a way to pay for that without reducing services to clients,” he said.
Lawmakers have had to deal with several Medicaid issues over the last few years, including other audit findings of misuse of funds and improper accounting procedures.
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