South Carolina Claimed Some Unallowable Room-and-Board Costs Under the Intellectual and Related Disabilities Waiver for State Fiscal Year 2010

The South Carolina Department of Health and Human Services (State agency) claimed Federal Medicaid reimbursement of $1.6 million during State fiscal year 2010 for unallowable room-and-board costs under the Intellectual and Related Disabilities (IRD) waiver program and did not reduce its Federal reimbursement by $7.9 million for an overpayment settlement.

The State agency claimed unallowable room-and-board costs because neither the State agency nor the South Carolina Department of Disabilities and Special Needs (the Department) had adequate controls to (1) ensure that the Department followed either applicable Federal law and guidance or its own guidance or (2) detect errors or misstatements on the local DSN boards' cost reports.

We recommended that the State agency refund to the Federal Government $1.6million; ensure that it removes room-and-board-related administrative costs from the cost reports in accordance with Federal regulations; implement the use of a uniform cost reporting process; strengthen the Department's and the State agency's cost report review processes to detect errors and to ensure compliance with Federal regulations; report as a credit on the Form CMS-64 the overpayment of $7.9 million that the Department identified in July 2010; and develop and implement controls to ensure that, after being notified of an overpayment, it reports the overpayment as a credit on the Form CMS-64 in a timely manner.

In comments on our draft report, the State agency agreed with our recommendations and described corrective actions it has taken or plans to take to address them.