Review of California Medicaid Claims for State Hospital Mental Health Patients Aged 22 Through 64 Temporarily Released to Acute Care Hospitals During the Period July 1, 1997 Through February 28, 2001

The objective of this review was to determine if controls were in place to preclude the State of California from claiming Federal financial participation (FFP) under the Medicaid program for residents of institutions for mental diseases (IMD) aged 22 through 64 who were temporarily released to acute care hospitals for medical treatment.  Our review found that adequate controls were not in place to preclude the State from inappropriately claiming FFP in such cases.  As a result, during the period July 1, 1997 through February 28, 2001, the State claimed $551,394 in unallowable FFP.  We recommended that the State (1) refund $551,394 to the Federal Government, and (2) establish controls to prevent FFP from being claimed under the Medicaid program for IMD residents aged 22 through 64 who are temporarily released to general acute care hospitals to receive medical treatment.  State officials disagreed with our finding and recommendations.  However, Departmental Appeals Board and Federal Court rulings have upheld Office of Inspector General disallowances in such cases in other States.