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Audit (A-03-05-00203)

04-21-2011
Review of Medicaid Reimbursement Rates for School-Based Services in West Virginia

Executive Summary

West Virginia's Department of Health and Human Resources' Bureau for Medical Services (the State agency) did not fully comply with the approved State plan. As a result, the State agency overpaid $22.8 million. The State agency included costs in the calculation of its rates for school-based services that were not included in the reimbursement methodology described in the approved State plan.

These errors occurred because the State agency did not provide adequate oversight of its consulting firm, Public Consulting Group, Inc., during the rate calculation process. We deducted the unallowable costs and recalculated the rates based on the reimbursement methodology described in the State agency's approved State plan.

We recommended that the State agency (1) refund $22.8 million to the Federal Government for unallowable costs included in reimbursement rates for school-based services for claims for State fiscal years (FY) 2001 through 2003, (2) work with CMS to determine the unallowable costs included in reimbursement rates for State FYs 2004 to the present and make the appropriate refund, and (3) work with CMS in developing more accurate school-based service rates and make necessary revisions to the State plan.

The State agency did not concur with our findings and recommendations. In response to our first recommendation, the State agency said that it "believes that operating and indirect costs were claimed in accordance with the State plan." In response to the second recommendation, the State agency said it has tried to work with CMS to determine the allowability of specific cost items, but CMS has never responded. Nothing in the State agency's comments has made us change our recommendations or our conclusion that the State agency included costs in the calculation of its rates for school-based services that were not included in the reimbursement methodology described in the approved State plan.

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