Review of Medicaid Inpatient Psychiatric Claims for 21 To 64 Year Old Residents of Private Psychiatric Hospitals That Are Institutions for Mental Diseases in California During The Period July 1, 1997 Through January 31, 2001

EXECUTIVE SUMMARY:

The objective of this review was to determine if the state of California had adequate controls to preclude claiming federal financial participation (FFP) under the Medicaid program for inpatient psychiatric services provided to residents who were ages 21 to 64 in private psychiatric hospitals that were IMDs.  Federal Medicaid law and regulations prohibit FFP for this care.  Our review found that adequate controls were not in place to preclude the state from inappropriately claiming FFP.  As a result, during the period of July 1, 1997 through January 31, 2001, the state claimed $3,083,389 in unallowable FFP for improper Medicare/Medicaid crossover claims for inpatient psychiatric care.  We recommended that the state (1) refund $3,083,389 to the Federal Government; (2) establish controls to prevent FFP from being claimed for IMD residents aged 21 to 64 in private psychiatric hospitals; (3) identify and refund any unallowable FFP claimed for inpatient psychiatric care provided to IMD residents aged 21 to 64 in private psychiatric hospitals subsequent to January 31, 2001, the cut-off date of our audit, and (4) identify and refund any unallowable FFP claimed for inpatient psychiatric care provided to IMD residents aged 21 to 64 in private psychiatric hospitals for the period July 1, 1987 through June 30, 1997.  State officials agreed with our audit recommendations.