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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of LaPorte Consortiumís Administrative Costs Claimed for Medicaid School-Based Services," (A-06-02-00051)

January 19, 2006

Complete Text of Report is available in PDF format (1.95 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Our objective was to determine whether the Medicaid school-based administrative costs that LaPorte Consortium claimed were reasonable, allowable, and adequately supported in accordance with Federal and State requirements. Some of the administrative costs that LaPorte claimed were not reasonable, allowable, or adequately supported. Based on a sample of 120 claims, we estimate that at least $2,408,218 (Federal share) was unallowable for reimbursement. We found that timestudy participants did not always maintain personal activity logs and sometimes charged incorrect activity codes. School districts sometimes included inappropriate personnel in the timestudy and did not offset claimed administrative costs with revenues received for direct services under School Health and Related Services.

We recommended that LaPorte work with the State agency to: (1) refund $2,408,218 to the Federal Government; (2) recalculate all claims for school districts with fewer than 3,500 students, remove the costs for principals, and refund the difference; (3)ensure that (a) only personnel expenditures that are related to Medicaid are included, (b) school districts retain adequate documentation, (c) unallowable operating costs are not included, (d) expenditures from other programs are not included, (e) direct service contract providers are not included, and (f) costs are not overstated; (4) ensure that time studies are adequately supported, do not include time spent on individualized education plan-related activities, include participants who understand activity codes, and include only appropriate participants; (5) offset costs claimed by SHARS revenues and refund the difference to CMS for prior, current, and subsequent periods; and (6) review periods after the audit period and work with CMS to make appropriate financial adjustments. In their reply to our draft report, LaPorte said that the findings should be divided into two categories: (1) errors reflecting lack of documentation, incorrect reporting, math errors, etc., and (2) policy-oriented findings. LaPorte agreed to correct errors as necessary in the first category. With regard to the second category, LaPorte believed that the OIG was applying standards that were inconsistent with the applicable State-approved methodology. LaPorteís reply did not categorize specific findings. LaPorte also requested additional information in order to address concerns regarding specific findings. We will provide the requested information.