Philadelphia County's Title IV-E Claims Based on Contractual Per Diem Rates of $300 or Less for Foster Care Services From October 1997 Through September 2002

We estimated that from October 1997 through September 2002, Pennsylvania improperly claimed at least $56.5 million of the total $562.3 million (Federal share) claimed for Title IV-E reimbursement on behalf of Philadelphia County children for whom the per diem rates were $300 or less.  Title IV-E of the Social Security Act, as amended, authorizes States to claim Federal funding for maintenance costs through the Administration for Children and Families (ACF).  The funding covers room and board payments to licensed foster care providers, administrative costs, and training.  Some c laims were unallowable because the services were provided to children whose situations did not meet eligibility requirements or provided by unlicensed foster care facilities. We were unable to determine the allowability of other claims because the contractors' per diem rates did not distinguish between services that were eligible or ineligible for Title IV-E reimbursement.

We recommended that the State refund $56.5 million and work with ACF to determine the allowability of $100 million related to claims that included both allowable and unallowable services; work with ACF to identify and resolve any unallowable claims made after the audit period and refund the appropriate amount; discontinue claiming Title IV-E reimbursement for ineligible children and services and unlicensed facilities; and direct Philadelphia County to develop rate-setting procedures that separately identify maintenance and other costs, including related administrative costs, so that claims are readily allocable to the appropriate Federal, State, and local funding sources.  The State disagreed with our findings and recommendations and provided additional documentation on some claims.  Based on this documentation, we revised the report accordingly.