Review of Indiana's Reporting Fund Recoveries for the Medicaid Rehabilitation Option Program on the Form CMS-64 for Fiscal Years 2000 to 2005

The State did not report Medicaid overpayments totaling $23.4 million ($14.5 million Federal share) and interest earned on the overpayments totaling $130,000 ($82,000 Federal share) in accordance with Federal requirements. The State did not report these amounts because it did not develop and implement internal controls to ensure that overpayments identified from surveillance and utilization review audits and interest earned on recovered overpayments were reported on the Form CMS-64.

We recommended that the State (1) include unreported Medicaid overpayments totaling $23.4 million on the CMS-64 and refund $14.5 million to the Federal Government, (2) include unreported interest earned on Medicaid recoveries totaling $130,000 on the CMS-64 and refund $82,000 to the Federal Government, and (3) develop and implement internal controls to correctly report and refund the Federal share of identified Medicaid overpayments and interest earned on the overpayments on the CMS 64.

In written comments on our draft report, the State disagreed with our first and third recommendations and did not address our second recommendation. After reviewing the State's comments, we maintain that our findings and recommendations are valid.