Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of the Oklahoma Department of Human Service's Medicaid Administrative Costs," (A-06-03-00046)

April 6, 2005


Complete Text of Report is available in PDF format (711 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


EXECUTIVE SUMMARY:

Our objectives were to determine whether (1) administrative costs that the Oklahoma Department of Human Services (the State agency) claimed were allowable, reasonable, and allocable for reimbursement under the Medicaid program and (2) targeted case management costs charged as administrative costs were allowable.  Of the $26,451,655 in administrative costs that the State agency claimed during our audit period, $3,589,374 ($1,799,193 Federal share) was not allowable, reasonable, or allocable for Medicaid reimbursement.  In addition, the State agency inappropriately charged $79.5 million ($39.75 million Federal share) in targeted case management costs as administrative costs, despite receiving separate reimbursement as a direct Medicaid service. While the State agency recognized these errors and periodically made adjustments to offset the costs inappropriately charged, it still needed to make offsets totaling $18,153,178 ($9,076,589 Federal share). 

We made several recommendations with regard to administrative costs, including that the State agency (1) refund $1,799,193 to the Federal Government and (2) discontinue claiming university indirect costs that it does not pay, as well as lawsuit settlement costs, and ensure that future administrative cost claims are made for allowable costs only.  With regard to targeted case management costs, we recommended that the State agency (1) refund to the Federal Government the $9,076,589 Federal share that it received for targeted case management costs charged as administrative costs and (2) discontinue claiming targeted case management costs as administrative costs.  The State agency did not contest our findings on cost adjustment errors or miscellaneous overcharges and indicated that it had already taken corrective action regarding targeted case management costs. However, the State agency disputed the draft report findings and conclusions concerning administrative costs pertaining to university indirect costs and lawsuit settlement costs.