Review of Arizona's Medicaid Claims for School-Based Health Services

Arizona did not always claim Federal reimbursement for Medicaid school-based health services in accordance with Federal and State requirements. Of the 100 sampled student-months, 46 had one or more school-based health services that were not allowable. Based on our sample results, we estimated that the State was improperly reimbursed at least $21.3 million in Federal Medicaid funds for school-based health services. Medicaid pays for medical services provided to children under Part B of the Individuals with Disabilities Education Act through a child's individualized education plan. In addition to other Federal and State requirements, school.based health services must be (1) actually furnished, (2) fully documented, (3) provided by an individual who meets Federal and State qualification requirements, (4) prescribed or referred by a physician or another appropriate professional, and (5)'provided to eligible recipients.

We recommended that Arizona (1) refund to the Federal Government $21.3 million for unallowable school-based health services, (2) review periods after our audit period and make appropriate financial adjustments for any unallowable school-based health services, (3) strengthen its oversight of the Direct Service Claiming program to ensure that claims for school-based health services comply with Federal and State requirements, and (4) revise its policy manuals to ensure compliance with Federal and State requirements. Arizona concurred with our second, third, and fourth recommendations but did not concur with our recommended refund. We continue to recommend that Arizona refund the $21.3 million.