Review of Acute Care Hospital Prison Inmate Expenditures Claimed by New Jersey to the Disproportionate Share Hospital Program for the Period Though June 30, 2001

EXECUTIVE SUMMARY:

This final report points out that New Jersey hired an outside contractor, under a contingency fee arrangement, to attempt to generate additional Federal reimbursement by identifying and submitting State expenditures, not previously claimed, for Federal reimbursement.  As a result, New Jersey inappropriately claimed health care costs (approximately $11.1 million Federal share) applicable to prison inmates under Medicaid's disproportionate share hospital program.  The New Jersey State plan explicitly excluded Federal sharing in the costs of health services provided to prison inmates.  Further, the Centers for Medicare & Medicaid Services's (CMS) guidance prohibited Federal sharing for prison inmate costs under the disproportionate share hospital program. We recommended that New Jersey refund $11.1 million to the Federal Government, adhere to its State plan requirements and CMS's policy clarification when submitting future disproportionate share hospital claims for Federal reimbursement, and  review all work performed by consultants to ensure the veracity of future Medicaid claims to the Federal Government.