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Vulnerabilities Exist in State Agencies' Use of Random Moment Sampling To Allocate Costs for Medicaid School-Based Administrative and Health Services Expenditures

Inadequate oversight at both the Centers for Medicare & Medicaid Services (CMS) and the State Medicaid agency (State agency) level created vulnerabilities in State agencies' use of random moment timestudies (RMTS) as a basis to allocate and claim Federal Medicaid reimbursement for costs associated with school-based administrative activities and health services. Previous OIG reviews of 10 State agencies that used RMTS to allocate costs for school district administrative claiming (SDAC) and school-based health services (SBHS) determined that the State agencies claimed a total of $435.4 million in SDAC and SBHS costs that were not in accordance with Federal requirements and guidance.

Of the 10 State agencies, 5 claimed unallowable SDAC and SBHS costs, 3 claimed SDAC costs without having properly submitted cost allocation plans that described their RMTS methodologies, and all 10 did not correctly develop the RMTS methodologies used to allocate costs. Furthermore, some of the annual cost settlements performed by three State agencies did not take all interim payments into account. In addition, three State agencies could not provide medical record documentation to support the responses provided by RMTS participants; therefore, we could not determine whether services for which the State agencies had claimed SBHS costs had actually been performed. Finally, we could not determine which portions of an additional $325.1 million of SDAC and SBHS costs were allowable in two States whose RMTS methodologies used sample universes that were or may have been inaccurate.

We made procedural recommendations to CMS for instructions to all State agencies regarding their SDAC and SBHS programs and their RMTS methodologies. We also recommended that CMS distribute formal guidance for the use of RMTS to allocate SBHS costs or consider no longer permitting States to use RMTS methodologies to allocate and claim SBHS costs.

CMS concurred with both of our recommendations and described corrective actions that it said it would take, to include issuing updated guidance to State agencies regarding (1) policies and procedures to monitor SDAC and SBHS programs and (2) the requirement to maintain and retain adequate medical record documentation to validate RMTS responses and support SBHS costs claimed.