Arkansas Inappropriately Received Medicaid Family Planning Funding for Federal Fiscal Years 2006 Through 2010

The State accurately claimed Federal reimbursement for $42.5 million of the $65.3 million in expenditures that it included on family planning worksheets from October 1, 2005, through September 30, 2010. The Federal Government pays its share of a State's medical assistance expenditures under Medicaid based on the Federal medical assistance percentage (FMAP), which varies depending on the State's relative per capita income. Family planning services are reimbursed at a 90-percent rate. Family planning services are those that prevent or delay pregnancy or otherwise control family size.

Of the remaining $22.8 million in expenditures, $16.1 million did not qualify for the 90-percent rate because it (1) exceeded limits specified in the State's infant delivery allocation methodology, (2) resulted from errors in compiling the family planning expenditures, and (3) resulted from errors in the computer programming used to identify infant delivery costs during three quarters for which we analyzed claim-level data. As a result, the State inappropriately received $1.9 million in additional family planning Federal share, which is the difference between the 90-percent rate and the regular FMAP.

In addition, $6.7 million in infant delivery expenditures resulted from the State's allocation methodology. The State could not support that the percentages it had used were a reasonable allocation of the costs, so we are setting aside the $929,000 in additional family planning Federal share that the State received for the allocated expenditures.

We recommended that the State (1) refund to the Federal Government $1.9 million in family planning Federal share; (2) work with CMS to determine the allowable portion of the $929,000 in family planning Federal share that it received for allocated sterilization costs; (3) review the claim-level data of quarters that we did not analyze, identify infant delivery costs incorrectly classified as family planning expenditures as a result of the programming errors, and refund overpayments to the Federal Government; (4) review its computer programming for identifying the cost of infant deliveries that include sterilizations, ensure that the programming excludes the cost of deliveries without sterilizations, and ensure that the programming correctly classifies the costs into delivery categories; (5) submit documentation to CMS supporting the reasonableness of the percentages used for allocating infant delivery costs as family planning expenditures; and (6) establish review procedures to ensure that family planning expenditures are correctly compiled, assigned, and claimed. The State concurred with all of our recommendations.