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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Four-State Review of Medicaid Payments for Incarcerated Beneficiaries," (A-04-02-06002)

June 7, 2004

Complete Text of Report is available in PDF format (269 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objectives of this review were to determine the amount of Medicaid funds improperly used to pay for outpatient health care services provided to incarcerated beneficiaries, and to quantify the potential cost savings to Medicaid that would result if inpatient services to incarcerated beneficiaries who are not in a prison setting were made unallowable.  Based on statistical samples, we estimate that improper Medicaid payments totaling $1.5 million (Federal share) were made for outpatient services provided incarcerated beneficiaries, and Medicaid could have saved about $1.5 million (Federal share) if the Medicaid payment policy on inpatient services for incarcerated beneficiaries were consistent with the policy on outpatient services.  We recommended that CMS ensure that State Medicaid agencies have polices and procedures for identifying incarcerated beneficiaries so that Federal funds are not claimed for outpatient services.  We also recommended that CMS consider a change in policy to exclude Federal sharing for inpatient services provided to incarcerated beneficiaries who are not in a prison setting.  The CMS concurred with our recommendations.