Texas Improperly Received Medicaid Reimbursement for School-Based Health Services

Not all of the direct medical service costs that the Texas Health and Human Services Commission (State agency) claimed for Medicaid School Health and Related Services (SHARS) were reasonable, adequately supported, and otherwise allowable in accordance with applicable Federal and State requirements. Specifically, Fairbanks, LLC (the Contractor), coded random moments incorrectly. Of the 3,161 random moments coded as an Individualized Education Plan-covered direct medical service, 274 were coded incorrectly. As a result of these errors, the State agency received $18.9 million in unallowable Federal reimbursement for the Medicaid SHARS program during the period October 1, 2010, through September 30, 2011.

These errors occurred because the State agency did not always follow its policies and procedures to ensure that the costs claimed for direct medical services were accurate and supported.

Additionally, the State agency's random moment sampling was not in accordance with applicable Federal requirements. Specifically, the State agency did not include all eligible sample moments in the random moment timestudies. Additionally, the Contractor used a random number generator that did not store or output the "seed" number that was used to generate the sample. The statistical validity findings occurred because the State agency did not follow Federal requirements to ensure its random moment sampling met acceptable statistical sampling standards.

We recommended the State agency (1) refund to the Federal Government the $18.9 million Federal share of unallowable reimbursement that was claimed for the Medicaid SHARS program because the random moments were coded incorrectly and (2) comply with Federal requirements for statistical validity to ensure its random moment sampling meets acceptable statistical sampling standards.