Review of Additional Reimbursement for Distinct-Part Nursing Facilities of Public Hospitals in California

EXECUTIVE SUMMARY:

Our objectives were to determine, for the selected facilities, whether the State agency (1) properly established eligibility for additional reimbursement and (2) claimed additional reimbursement amounts in accordance with State and Federal requirements. 

The State agency properly established eligibility for additional reimbursement for the selected facilities. However, the State agency did not claim additional reimbursement amounts for two facilities in accordance with State and Federal requirements. The errors occurred because the State agency did not provide adequate instructions to the facilities to properly calculate the certified public expenditures used to support additional reimbursement amounts. Also, the State agency did not have adequate monitoring procedures to ensure that the facilities properly calculated their reported Medicaid days and expenditures. The improper calculations resulted in an overpayment of $3,609,267 (Federal share).

We recommended that the State agency: (1) refund $3,609,267 to the Federal Government, (2) review additional reimbursement amounts paid to the selected facilities subsequent to our audit period and refund any overpayments, (3) provide adequate instructions to all facilities to ensure that the certified public expenditures used to support additional reimbursement amounts are properly calculated, and (4) strengthen monitoring procedures to ensure that all facilities' reported Medicaid days and expenditures are properly calculated. The State agency disagreed with our finding and recommended disallowance related to the overstatement of one facility's estimated quarterly costs. However, it agreed with the remaining findings and recommendations.