Tennessee Home and Community-Based Mental Retardation Services for July 1, 2002, Through June 30, 2003

Our objectives were to determine whether the State Medicaid agency claimed Federal reimbursement for home and community-based services (HCBS) that were adequately supported in the providers' records and provided in accordance with the beneficiaries' approved plans of care.  Based on our sample results, we estimate that during State fiscal year 2003, the State Medicaid agency claimed approximately $11 million ($7 million Federal share) for HCBS that were not supported by provider records.  The Federal reimbursement for these unallowable claims occurred because the State Medicaid agency did not ensure that HCBS costs were allowable.

We recommended that the State Medicaid agency (1) refund to the Centers for Medicare & Medicaid Services the $7 million estimated excess Federal reimbursement for State fiscal year 2003; (2) direct the Division of Mental Retardation Services to establish controls and procedures to account for changes in the actual level of services provided, ensure that claims are adequately supported, and ensure that HCBS are rendered in accordance with the beneficiary's plan of care; and (3) review its claims filed after our audit period and refund any overpayments identified.  The State Medicaid agency did not specifically address our first recommendation.  With respect to the second and third recommendations, the State Medicaid agency acknowledged that additional oversight and controls were needed and said that it had increased its monitoring efforts.