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Audit (A-09-10-02017)

08-31-2011
Audit of Oregon's Medicaid Management Information System Expenditures for the Period October 1, 2007, Through September 30, 2009

Executive Summary

The Department of Human Services (State agency) did not always claim enhanced Federal Medicaid reimbursement for Medicaid Management Information System (MMIS) expenditures in compliance with Federal requirements. An MMIS is a system of software and hardware used to process Medicaid claims and manage information about Medicaid beneficiaries and services. Federal law authorizes Federal reimbursement at enhanced rates of 90 percent for the design, development, or installation of an MMIS and 75 percent for the operation of an MMIS.

Of the $31 million that we reviewed, $27.4 million was claimed correctly. For the remaining $3.5 million, we determined that the State agency claimed $655,000 for employee salaries and fringe benefits and contractor and postage expenditures at incorrect Federal reimbursement rates and $548,000 for unallowable contractor and employee expenditures, which resulted in an overpayment of $566,000 (Federal share). The State agency also claimed $2.3 million ($1.7 million Federal share) for contractor expenditures and employee salaries and fringe benefits that may have been unallowable.

We recommended that the State agency (1) refund $566,000 to the Federal Government, (2) work with the Centers for Medicare & Medicaid Services to determine which portions of the $1.7 million that we set aside were calculated using correct reimbursement rates and were for allowable Medicaid activities and refund to the Federal Government the amounts that were overpaid, and (3) strengthen internal controls to ensure that its MMIS expenditures are claimed at correct reimbursement rates and are allowable for Medicaid reimbursement. The State agency partially concurred with our first recommendation and concurred with our second and third recommendations.

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