Pennsylvania Claimed Unallowable Medicaid Administrative Costs for the Regional Housing Coordinator Initiative

Pennsylvania did not comply with Federal requirements when it claimed $2 million (Federal share) of Medicaid administrative costs for the Pennsylvania Regional Housing Coordinator Initiative (Initiative) costs. The claimed costs represented indirect services, such as information, referrals, training, and technical assistance, to support Pennsylvania's housing programs, including programs that provided housing services to Medicaid beneficiaries transitioning to waiver programs. These indirect services were not directly related to the administration of the Medicaid program. Accordingly, Pennsylvania's claims of the Initiative's costs from July 2008 through December 2011 were unallowable.

We recommended that Pennsylvania (1) refund $2 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 the Initiative's activities were directly related to the administration of the Medicaid program and should be an allowable administrative cost.