New York Claimed Unallowable Room-and-Board Costs Under Its Developmental Disabilities Waiver Program

The New York State Department of Health (DOH) claimed Federal Medicaid reimbursement for unallowable room-and-board costs for residential habilitation services provided at State-operated residences under New York's developmental disabilities waiver program. Specifically, certain unallowable room-and-board costs, such as repairs, maintenance, utilities, and property-related costs, were included in the indirect costs used to calculate the residential habilitation services payment rates. As a result, DOH claimed $60.8 million (Federal share) in unallowable Medicaid reimbursement.

We recommended that DOH (1) refund $60.8 million to the Federal Government and (2) ensure that the State's Office for People With Developmental Disabilities excludes all unallowable room-and-board costs from indirect costs used in payment rate calculations for residential habilitation services. DOH disagreed with our first recommendation (financial disallowance) and did not indicate concurrence or nonconcurrence with our second recommendation.