Review of Indiana's Reporting Fund Recoveries for Federal and State Medicaid Programs on the Form CMS-64 for Federal Fiscal Years 2000 Through 2008

For Federal fiscal years (FY) 2000 through 2008, we estimated that Indiana did not report Medicaid overpayments totaling $61.6 million ($38.9 million Federal share) in accordance with Federal requirements. Also, the State did not report interest it collected on 24 overpayments totaling $62,000 ($39,000 Federal share) in accordance with Federal requirements. Federal law requires States to refund the Federal share of Medicaid overpayments. In addition, Federal regulations require States to refund interest earned on overpayments before requesting additional Federal funds.

We recommended that Indiana (1) include unreported Medicaid overpayments of $61.6 million on the Form CMS-64 and refund $38.9 million to the Federal Government, (2) include unreported interest it collected on Medicaid recoveries totaling $62,000 on the Form CMS-64 and refund $39,000 to the Federal Government, and (3) develop and implement internal controls to correctly report and refund the Federal share of identified Medicaid overpayments and interest collected on the overpayments on the Form CMS 64.

In written comments on our draft report, the State agreed with our third recommendation. Regarding the first recommendation, the State provided additional documentation and indicated that most of the overpayments exceeding $1 million were repaid, reported, or resolved. Regarding the second recommendation, the State said it "routinely uses interest assessment as a form of settlement with providers." As a result of the additional documentation, we revised our findings and recommendations to exclude $26.9 million in overpayments. We maintain that our findings and recommendations for the remaining $61.6 million in overpayments are consistent with Federal requirements and that the State's policies regarding interest earned on overpayment amounts are not in accordance with Federal regulations.