Kansas Improperly Received Medicaid Reimbursement for School-Based Health Services

Not all of the Medicaid direct medical service costs that the Kansas Department of Health and Environment, Division of Health Care Finance (State agency), claimed for school-based health services (SBHS) were reasonable, adequately supported, or otherwise allowable in accordance with Federal and State requirements. As a result, the State agency received a total of $10.7 million in unallowable Federal reimbursement during the period July 1, 2009, through June 30, 2010.

Specifically, the State agency accounted for only $17.1 million ($11.9 million Federal share) of the $24.8 million ($17.3 million Federal share) in interim payments (paid to participating school districts for SBHS) during final cost settlement. As a result of this error, the State agency received $5.4 million in unallowable Federal reimbursement. The State agency also received $4.7 million in unallowable Federal reimbursement because it claimed unallowable costs based on random moment timestudy errors. In addition, the State agency claimed Medicaid direct medical service costs that were not supported by its internal cost reporting system and as a result, received $643,000 in unallowable Federal reimbursement. Finally, the State agency received $11,000 in unallowable costs because the Kansas City, Kansas, public school district overstated employee benefit and supply costs.

The State agency did not have adequate policies and procedures to monitor the SBHS program and to ensure that it claimed all costs in accordance with applicable Federal and State requirements.

We recommended the State agency refund $10.7 million to the Federal Government for unallowable SBHS costs and strengthen policies and procedures to monitor the SBHS program and ensure that (1) SBHS costs are accurate and supported and (2) it claims all SBHS costs in accordance with applicable Federal and State requirements. In written comments on our draft report, the State agency described corrective actions that it had implemented or planned to implement for most of our findings. The State agency disagreed with our finding related to the random moment timestudy errors. While the State agency disagreed with our proposed recoupment related to these errors, it said that it was willing to work with the Centers for Medicare & Medicaid Services to develop a method to recalculate the fiscal year 2010 direct reimbursement percentage that would satisfy all parties.