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Audit (A-07-06-04067)

Review of Colorado Medicaid Mental Health Capitation and Managed Care Program

Executive Summary

The supplemental payments that the State made for mental health services provided to foster care children in child placement agencies were not fully consistent with Federal and State requirements. Of the $23 million ($11.7 million Federal share) in supplemental payments made during our audit period, $3.3 million (Federal share) was unallowable because, contrary to Federal requirements, the State did not obtain the Centers for Medicare & Medicaid Services' (CMS) approval of contracts covering the supplemental payments from August 13, 2003, through the end of our audit period (September 30, 2004).

In addition, the State did not provide documentation that the remaining $8.4 million (Federal share) in supplemental payments was removed from the capitation payments that the State made to mental health assessment and service agencies. Thus, we are setting aside the $8.4 million for CMS adjudication.

We recommended that the State (1) refund $3.3 million to the Federal Government for the Federal share of the unauthorized supplemental payments and (2) work with CMS to resolve the $8.4 million (Federal share) in supplemental payments for which the State did not provide documentation that the supplemental payments were not already included in the capitation payments.

In written comments on our draft report, the State disagreed with our findings and recommendations. After reviewing the State's comments, we modified our report and removed the finding of unallowable costs related to the failure to comply with State contract provisions. We also modified our report to set aside, rather than question, the $8.4 million in potentially unallowable supplemental payments.

Complete Report

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