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Audit (A-03-12-00203)

Maryland Claimed Costs for Unallowable Room and Board and Other Residential Habilitation Costs Under Its Community Pathways Waiver Program

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The Maryland Department of Health and Mental Hygiene (State agency) did not comply with Federal and State requirements when it claimed costs for residential habilitation services under its Community Pathways waiver program (waiver). The waiver provides home and community-based services, including residential habilitation services, to individuals with developmental disabilities in group homes, alternative living units, or individual family care homes. We estimate that, as a result of claim errors, the State agency claimed at least $20.6 million (Federal share) in unallowable costs.

Of the 100 claim lines that we sampled, 5 complied with Federal and State requirements; however, 95 did not. The 95 claim lines had 135 errors. For 81 claim lines, the State agency included unallowable costs for room and board. For 54 claim lines, the State agency reduced provider payments to reflect amounts in excess of room and board that providers had collected from beneficiaries but did not reduce claims for Federal reimbursement accordingly. Forty claim lines included both errors. (Fourteen claim lines, with service dates after December 2011, had errors related only to excess beneficiary payments.) The State agency claimed these unallowable costs because it lacked internal controls to ensure that unallowable costs were not included in claims for provider per diem payments.

We recommended that the State agency (1) refund $20.6 million to the Federal Government and (2) claim only actual expenditures for allowable costs. The State agency concurred with our recommendations.

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