Audit of Houston Administrative Costs Claimed for Medicaid School-Based Health Services

EXECUTIVE SUMMARY:

The objective of this review was to determine whether the administrative expenditures claimed by the Houston Independent School District for school-based health services for the period October 1, 1999 through September 31, 2000 were reasonable, allowable, and adequately supported in accordance with applicable Federal regulations and the terms of the State Medicaid contract.  We found that Houston's system of calculating its claim was not reliable and unallowable costs were included in the calculations.  As a result, the claim for school-based administrative expenditures was not allowable or adequately supported in accordance with Federal and State regulations.  The supporting cost documentation, the allocation methodologies, and the time studies used by Houston did not support the Federal reimbursement of $2,792,575.  We recommended that Houston make (1) a financial adjustment of $2,792,575 through the Medicaid State agency for the Federal share of costs not in compliance with Federal and State requirements and (2) procedural improvements.