North Carolina Incorrectly Claimed Enhanced Federal Reimbursement for Some Medicaid Services That Were Not Family Planning

North Carolina did not always claim Medicaid family planning reimbursement in accordance with Federal and State requirements. Based on our sample results, we estimated that the State improperly claimed $1.4 million (Federal share) in Medicaid reimbursement for pharmacy claims from October 1, 2004, through September 30, 2007.

The Social Security Act requires States to furnish family planning services and supplies to individuals of childbearing age who are eligible under the State Medicaid plan and who desire such services and supplies. The amount of funding that the Federal Government reimburses to State Medicaid agencies, known as the Federal share, is determined by the Federal medical assistance percentage (FMAP). The Federal Government is authorized to reimburse States for expenditures in family planning services at an FMAP of 90 percent (enhanced rate).

Of 104 pharmacy claims in our stratified random sample, 21 claims did not meet requirements. Of 126 sterilization and clinic and practitioner claims that we reviewed in our judgmental sample, 3 sterilization claims did not qualify for reimbursement at the enhanced rate because the claims were not supported by consent forms that met Federal requirements. The State made these improper claims because it did not have adequate controls to ensure that it claimed only Medicaid family planning services at the enhanced rate.

We recommended that the State (1) refund $1.4 million to the Federal Government for non-family-planning pharmacy claims that were reimbursed at the enhanced rate, (2) refund $4,000 to the Federal Government for non-family-planning sterilization claims that were reimbursed at the enhanced rate, (3) improve controls to ensure that the State claims the enhanced rate only for contraceptive drugs that physicians prescribe for family planning purposes, (4) reemphasize to providers that only services clearly provided for family planning purposes should be billed as family planning, and (5) improve controls to ensure sterilization consent forms are completed in accordance with Federal regulations. The State concurred with our second recommendation but generally did not concur with the remaining recommendations.