Review of Federal Medicaid Claims Made By Inpatient Substance Abuse Treatment Facilities in New Jersey

Executive Summary

New Jersey improperly claimed Federal Medicaid reimbursement for services to patients in 30 inpatient substance abuse treatment facilities. All 30 facilities were either Institutions for Mental Disease (IMD) or they were not participating institutional Medicaid providers or accredited psychiatric facilities. New Jersey's Medicaid plan does not cover services to individuals between the ages of 22 and 64 who are patients in an IMD. The plan also does not cover inpatient substance abuse treatment services furnished by facilities that are not participating institutional Medicaid providers or accredited psychiatric facilities.

As a result, the State improperly received $1.7 million in Federal Medicaid funds. We recommended that the State (1) refund $1.7 million to the Federal Government, (2) ensure that its controls to designate claims from inpatient substance abuse treatment facilities as federally nonparticipating are properly working, and (3) determine the amount of improper Federal Medicaid reimbursement claimed subsequent to our audit period and return these overpayments to the Federal Government. The State concurred with our finding and recommendations.