Review of Medicaid Claims for County Nursing Facility Supplementation Payments by the Commonwealth of Pennsylvania

EXECUTIVE SUMMARY:

Under Medicaid upper payment limit rules, States are permitted to establish payment methodologies that allow for enhanced payments (called supplementation payments in Pennsylvania) to non-State-owned government providers, such as county nursing facilities. This final report points out that in reporting supplementation payments to the Health Care Financing Administration (HCFA), the Pennsylvania Department of Public Welfare (DPW) over claimed $89 million in Federal matching funds for the period 1997 through 1999. In addition, we estimate that DPW may have over claimed an additional $65 million for 1990 through 1996, bringing the total overpayment to a potential $155 million. The over claimed amounts represent the differences between (1) the actual supplementation payments supported by intergovernmental transfers and DPW voucher transmittals and (2) claimed supplementation payments actually reported by DPW to HCFA. We recommended that DPW; (1) discontinue the practice of over claiming Federal matching funds by over reporting supplementation payments; (2) refund $89 million to the Federal Government; and (3) together with HCFA, determine if the practice of over claiming such costs occurred for the period 1990 through 1996, and if so, refund the associated excess Federal matching funds we estimate to be $65 million.