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Audit (A-03-11-00203)

Delaware Did Not Comply With Federal Requirements To Report All Medicaid Overpayment Collections

Executive Summary

We found that Delaware did not comply with Federal requirements to report all Medicaid overpayment collections. Of the $16.29 million Medicaid overpayments collected, the State failed to report $16.27 million ($10 million Federal share). State officials said that they believed the overpayments had been netted out of reported Medicaid expenditures but did not provide support for such an adjustment.

States receive a Federal share for medical assistance based on the Federal medical assistance percentage (FMAP), which varies depending on the State's relative per capita income. The American Recovery and Reinvestment Act of 2009 authorized the States to temporarily receive a higher FMAP (enhanced rate) during a specified recession adjustment period. States claim medical assistance and administrative costs, and credit CMS with any refunds due, on Form CMS-64, Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program (Form CMS-64). CMS's Medicaid Budget and Expenditure System allows States to submit Form CMS-64 electronically.

The State based its calculation on the FMAP in effect before the Recovery Act increased the Federal share but did not provide support that the claims had been paid at the lower rate. The State did not properly report its collections for Medicaid overpayments because it did not develop and implement effective internal controls to ensure accurate reporting on Form CMS-64.

We recommended that the State (1) include unreported Medicaid overpayment collections of $16.27 million on the next Form CMS-64 and refund $10 million to the Federal Government, (2) identify and report any unreported Medicaid overpayments collected before and after our audit period, (3) account for the incorrectly calculated Federal share for the collections resulting from fraud and abuse investigations by refunding $2,400 to the Federal Government, (4) apply the correct FMAP when reporting Medicaid overpayments on Form CMS-64, and (5) develop and implement internal controls that will enable the State to correctly report and refund the Federal share of Medicaid overpayments on Form CMS-64. The State concurred with our second, third, and fourth recommendations; partially concurred with our fifth recommendation; and did not concur with our first recommendation.

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