Audit of the Kentucky Department for Medicaid Services' On-Demand Payments, Interim Payments, and Write-Off and Adjustment Process

EXECUTIVE SUMMARY:

The objectives of this audit were to determine if the Kentucky Department for Medicaid Services (DMS):  (1) accounted for on-demand payments to nursing facilities for the period October 1, 1999 through September 30, 2002; (2) used appropriate collection efforts to recoup interim payments; and (3) accounted for the Federal share of all write-offs and overpayment adjustments made for the quarters ended September 30, 2002 and December 30, 2002.  We found that DMS did not properly account for on-demand payments to a nursing facility that resulted in overpayments totaling $165,416 (Federal share).  DMS did use appropriate collection efforts to recoup payments made through its interim payment process and reimbursed the Federal share of the interim payments.  However, DMS did not properly account for the Federal share of all write-offs.  DMS reported $142,962 (Federal share) of write-offs on the Centers for Medicare and Medicaid (CMS)-64 report for which it did not provide adequate support.  In addition, the reporting process DMS used differs from the method CMS prescribed, and is vulnerable to reporting errors.  We recommended financial adjustments and procedural improvements to correct noted weaknesses.  DMS generally concurred with our findings and recommendations.