Audit of Nursing Homes and Denial of Payment Remedies State of Indiana, October 1, 1999 Through September 30, 2001 - Indiana Family and Social Services Administration

EXECUTIVE SUMMARY:

The objectives of this audit were to ensure that the mandatory denial of payment remedy for substandard quality of care was applied to nursing homes that were not in substantial compliance with the prescribed Medicaid participation requirements and to evaluate whether State controls were adequate to prevent improper Medicaid payments to nursing homes under the denial of payment remedy.  Our audit included denial of payment sanctions, which were in effect from October 1, 1999 to September 30, 2001.  The Indiana Family and Social Services Administration (State agency) correctly applied the mandatory denial of payment remedy to all nursing homes providing substandard quality of care and meeting the criteria for mandatory denial of payment.  We found that State controls were adequate to prevent improper Medicaid payments to sanctioned nursing homes, as required in Title XIX, section 1919 of the Social Security Act and 42 CFR ' 488.  The State agency applies the denial of payment remedy through a “pay and chase” system of identifying and recovering Medicaid overpayments to nursing homes that are under sanction.