Wisconsin Improperly Claimed Federal Medicaid Reimbursement for Most Residential Care Center Payments

Most of the Wisconsin Department of Health Services' (State agency) claims for Residential Care Center (RCC) payments under the HealthCheck program did not comply with Federal requirements. RCC payments contain treatment services provided by youth care workers and social workers that could be claimed as "other services" under the State's Medicaid Early and Periodic Screening, Diagnostic, and Treatment program, known as HealthCheck.

Of the $41.4 million ($24 million Federal share) that the State agency claimed on its quarterly CMS-64 for RCC payments under the HealthCheck program, $39.4 million ($22.8 million Federal share) was unallowable. The State agency used a cost allocation methodology that did not comply with Federal requirements. The methodology used estimates that it could not adequately support. In addition, the State claimed unsupported administrative costs as an add-on to the RCC service costs. The remaining $2 million ($1.1 million Federal share) was allowable.

We recommended that the State agency (1) refund $22.8 million to the Federal Government for unallowable RCC costs claimed under HealthCheck and (2) work with CMS to identify payment and allocation methodologies for claiming allowable Medicaid RCC costs under HealthCheck. The State agency did not concur with our recommendations.