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Audit (A-03-11-00208)

04-10-2014
Maryland Underreported the Federal Share of Medicaid Overpayment Collections

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Summary

The Maryland Department of Health and Mental Hygiene (State agency) did not comply with Federal requirements for reporting Medicaid overpayment collections. In calculating the amount of overpayments to report, the State agency applied an incorrect Federal medical assistance percentage (FMAP). As a result, during our audit period the State agency underreported the Federal share by $30.3 million: $23.6 million for collections we identified that were reported on line 9 of the Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program (Form CMS-64) and $6.6 million for waiver adjustments the State agency identified that were reported on other lines of Form CMS-64. States receive a Federal share for medical assistance based on the FMAP, which varies depending on the State's relative per capita income. States report Medicaid expenditures and claim the associated Federal share on Form CMS-64.

The State agency determined that it had also underreported the Federal share by $12.1 million for adjustments outside our audit period. In addition, the State agency incorrectly recorded in the Medicaid Management Information System amounts for line 9 of Form CMS-64 that were not Medicaid overpayment collections and incorrectly reported some Medicaid overpayment collections on other lines of Form CMS-64.

We recommended that the State agency (1) refund to the Federal Government $30.3 million in underreported Federal share for collections and adjustments reported during our audit period,

(2) refund to the Federal Government $12.1 million in underreported Federal share for adjustments reported outside of our audit period, (3) apply the correct FMAP when reporting Medicaid overpayment collections and adjustments on Form CMS-64, and (4) develop and implement internal controls that will enable the State agency to correctly report Medicaid overpayment collections and refund the proper Federal share on Form CMS-64. The State agency said that it did not concur with our first two recommendations because it had submitted adjustments to account for them during the course of our review. The State agency concurred with our remaining two recommendations.

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