Audit of Hawaii's Medicaid Expenditures for Nursing Facility Services for the Period July 1, 2003, Through June 30, 2004

EXECUTIVE SUMMARY:

Our objective was to determine whether Hawaii's reported Medicaid expenditures for services provided to beneficiaries in nursing facilities complied with Federal and State requirements for the period July 1, 2003, through June 30, 2004.  In general, Hawaii's reported Medicaid expenditures for services provided to beneficiaries in nursing facilities complied with Federal and State requirements.  However, Hawaii overpaid nursing facilities for a small number of ancillary services and could not support the reasonableness of its negotiated prospective payment system (PPS) rates for subacute care.  We recommended that (1) Hawaii refund $9,532 to the Federal Government, representing the Federal share of the overpayments related to ancillary services, and (2) enforce the Hawaii Administrative Rules to require nursing facilities to separately account for subacute care costs on their cost reports so that Hawaii can ensure that its negotiated PPS rates are reasonable.  Hawaii officials agreed with our findings and recommendations.