Pennsylvania Claimed Medicaid Administrative Costs for Provider Training Under Its Restraint Reduction Initiative

Pennsylvania did not comply with Federal requirements when it claimed Medicaid administrative costs for the Pennsylvania Restraint Reduction Initiative (Initiative) costs. The claimed costs were for training nursing home providers and not for the administration of the Medicaid program. The Centers for Medicare & Medicaid Services explicitly prohibits claiming provider training as Medicaid administrative costs. Accordingly, Pennsylvania's claims totaling $6 million ($3 million Federal share) in Initiative costs for State fiscal years 1996-1997 through 2010-2011 were unallowable.

In 1996, Pennsylvania launched the Initiative to train nursing home providers to reduce the use of physical restraints in compliance with Federal regulations. The Initiative subsequently introduced provider training to address other quality-of-life issues in nursing homes.

We recommended that Pennsylvania (1) refund $3 million in Federal funds for unallowable Initiative costs, (2) refund the Federal share of unallowable Initiative costs claimed after our audit period, and (3) discontinue all future claims of Initiative costs. Pennsylvania said that it continued to believe that the Initiative costs were directly related to the administration of the Medicaid program and therefore allowable.