New Jersey Claimed Hundreds of Millions in Unallowable or Unsupported Medicaid School-Based Reimbursement

New Jersey did not follow Federal regulations and CMS guidance when it developed its payment rates for Medicaid school-based services and, as a result, claimed $300.5 million in unallowable costs. New Jersey claimed an additional $306.2 million in reimbursement using payment rates developed with unsupported costs.

Among our findings, we determined that (1) New Jersey's contractor changed school employees' responses to timestudies to indicate that their activities were directly related to providing Medicaid services when the responses indicated the activities were unrelated, (2) New Jersey improperly incorporated into its payment rates more than $400 million owed to the school employees' pension fund despite not having made scheduled payments to the fund in nearly 20 years, and (3) salaries of some employees who did not provide health-related services were incorporated into the payment rates. In addition, New Jersey did not maintain documentation related to the timestudies, which it used to identify the percentage of time personnel provided particular services.

We recommended that New Jersey refund $300.5 million in Federal Medicaid reimbursement claimed based on payment rates that incorporated unallowable costs, work with CMS to determine the allowable amount of the remaining $306.2 million claimed for Federal Medicaid reimbursement, and revise its payment rates so they comply with Federal requirements. New Jersey disagreed with our findings and recommendations.