Review of Medicaid Participation Eligibility for One Indiana State-owned Psychiatric Hospital for the Period July 1, 1996, Through June 30, 2007

During the period July 1, 1996, through June 30, 2007, the Indiana Family and Social Services Administration (the State agency) paid $26.2 million ($16.3 million Federal share) to hospital A, which was not eligible to receive Medicaid payments for inpatient psychiatric services. Hospital A did not meet Federal Medicaid eligibility requirements because it did not demonstrate compliance with two special Medicare Conditions of Participation requirements.

We recommended that the State agency (1) refund $16.3 million to the Federal Government for Medicaid inpatient psychiatric service payments made to hospital A from July 1, 1996, through June 30, 2007; (2) identify and refund the Federal share of additional unallowable Medicaid payments to hospital A for inpatient psychiatric services provided after June 30, 2007; and (3) ensure that Medicaid payments for inpatient psychiatric services are made only to eligible hospitals.

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