Audit Of Oregon's Medicaid Reimbursement Rates For Nursing Facilities For The Period July 1, 2001 Through June 30, 2003

EXECUTIVE SUMMARY:

The objectives of this audit were to determine whether Oregon had accurately computed Medicaid nursing facility reimbursement rates in accordance with Federal regulations and the State Medicaid plan and had controls in place to ensure that costs used to set the rates were allowable.  We found that the rates had been calculated before all cost reports submitted by nursing facilities had been audited.  As a result, unallowable costs were included in the calculation and the rates were overstated, resulting in overpayments to nursing facilities of $488,182 ($290,768 Federal share) during the 20-month period July 2001 through February 2003.  In addition to recommending that the State refund the Federal share, we recommended that the State determine the overpayment amount for the 4-month period March through June 2003 (this information was not available while we were performing our audit), and ensure that nursing facility cost reports were reviewed timely and all adjustments reflected in the calculations of the reimbursement rates to help avoid future overpayments.  The State did not indicate whether it would make the recommended refunds, stating that the individual rate and payment errors were non-material.  However, the State did agree to take corrective action to minimize the potential for overpayments to nursing facilities.