Review of Montgomery County's Medicaid Administrative Health Services Costs Claimed by Maryland Between October 2003 and September 2004

EXECUTIVE SUMMARY:

Our objective was to determine whether Maryland claimed Montgomery County's Medicaid administrative health services costs through its cost allocation plan in accordance with Federal guidance. Maryland's claim of Montgomery County's administrative health service costs conformed to the parameters of the approved cost allocation plan. However, we believe a significant control weakness exists in the current methodology since there is no way to validate that County staff performed the purported Medicaid-related activity generating the claim for Federal matching funds. The county also received an additional $225,023 in Federal matching funds for claiming the enhanced 75-percent rate for administrative services performed by skilled professional medical personnel (SPMP). We do not believe the performance of these activities required the professional education and training necessary for claiming the enhanced SPMP rate.

We recommended that CMS determine (1) whether the county's current allocation methodology contains the necessary controls that can assure Medicaid-related activities were performed and (2) whether the county should discontinue claiming enhanced Federal funding for administrative activities performed by SPMPs. Maryland generally disagreed.