Review of Administrative Costs for Community Mental Health Centers in Indiana

EXECUTIVE SUMMARY:

Our objective was to determine whether Medicaid administrative costs incurred by community mental health providers in Indiana were claimed and paid in accordance with applicable State and Federal regulations.

Federal reimbursement for the Medicaid Recovery Program was overstated by $328,151 (Federal share) for fiscal year 2003. Our review of Indiana's program oversight disclosed $223,244 in unrecovered net provider overpayments that had previously been identified through State audits, offset by $44,590 of underclaimed provider costs resulting from contractor claim processing errors. Our review at three selected providers disclosed net overpayments of $149,497 for improperly reported costs due to flawed cost allocations, errors, unallowable costs and an incomplete sampling universe. Indiana had not recovered most of the audit-identified overpayments because it mistakenly believed a two-year Federal overpayment recovery limit had lapsed. We recommended that Indiana refund $328,151 and implement procedural refinements to reduce the likelihood of future overpayments. Indiana agreed with the recommendations.