Review of Family Planning Service Costs Claimed by Pennsylvania's Medicaid Managed Care Program

EXECUTIVE SUMMARY:

This audit is part of a CMS-requested multistate review of the rates used to claim family planning service costs at the 90-percent Federal funding rate.  Our objective was to determine whether Pennsylvania claimed family planning service costs under its Medicaid managed care program in accordance with its CMS-approved methodology and Federal statutes, regulations, and guidelines.  Pennsylvania did not claim family planning service costs in accordance with its CMS-approved methodology.  Pennsylvania included ineligible costs for (1) family planning services for beneficiaries not eligible to enroll in managed care and not represented in the denominator and (2) services that did not qualify as family planning.  As a result, between October 2000 and February 2004, Pennsylvania overstated its claim for family planning service costs by $44.4 million.  By claiming these costs at the enhanced rate of 90 percent, Pennsylvania received about $15.1 million in unallowable Federal reimbursement. 

We recommended that Pennsylvania (1) refund to the Federal Government $15,070,548 in family planning service costs incorrectly claimed between October 2000 and February 2004 and (2) apply the audited family planning factors for claims after February 2004 and refund the Federal share of any overpayments.  Pennsylvania did not concur with our recommended refund, but agreed to consider the prospective use of the audited factors.