Review of Enhanced Federal Share Claimed for Family Planning Services in Arizona During Federal Fiscal Years 2000, 2001, and 2002

EXECUTIVE SUMMARY:

Our objective was to determine whether Arizona claimed enhanced Federal share for managed care family planning services pursuant to Medicaid regulations and guidelines.  Arizona included an unsupported eleven percent component representing the health plans' administration, profit, and contingency expenditures in family planning rates used to determine managed care family planning services costs.  As a result, between October 1999 and September 2002, Arizona increased its claims of family planning services costs by $2,273,109.  By claiming these costs at the enhanced family planning rate of 90 percent, rather than its regular Federal share, Arizona's claim for Federal reimbursement increased $558,093.

We recommended that the Medicaid agency work with CMS to determine the eligibility of the $558,093 enhanced Federal share claimed for administration of family planning services and ensure future rates used to identify the family planning portion of the capitation payments for claiming enhanced Federal share for administrative costs be specifically identified and documented as related to family planning services.