Department of Health and Human Services

Office of Inspector General -- AUDIT

"Medicaid School-Based Health Services Administrative Costs - Massachusetts July 1999 Through June 2001," (A-01-02-00016)

September 20, 2004

Complete Text of Report is available in PDF format (673 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of this audit was to determine whether costs claimed by Massachusetts for school-based administrative activities on behalf of individual local education agencies were allowable in accordance with the terms of applicable Federal requirements, Centers for Medicare & Medicaid Services guidelines, and the Medicaid State plan.  We found that five of eight local education agencies did not accurately allocate administrative costs to reflect relative Medicaid benefits received.  As a result, they overstated their claims by $4,952,453.  Also, one of the eight local education agencies double-counted salaries and fringe benefits when identifying costs to be allocated.  As a result, the agency overstated its claim by $359,994.  These problem occurred because Massachusetts did not provide specific guidance to local education agencies regarding proper allocation methods.  Future, the internal control structures at location education agencies were not adequate to ensure that costs claimed were properly allocated and reasonable, and Massachusetts did not monitor the appropriateness of claims even when they increased significantly from period to period.  In addition to financial adjustments, we recommended that Massachusetts provide technical assistance to ensure that local education agencies strengthen internal controls over how they compute their Medicaid share percentages and implement a monitoring system to ensure that local education agencies properly calculate claims for Medicaid reimbursement.