Review of Medicaid Reimbursement of Graduate Medical Education in Missouri

Our objective was to determine whether the State agency's claims for Medicaid reimbursement of graduate medical education (GME) payments to Children's Mercy Hospital (the hospital) complied with Federal law and the approved State plan.

The State agency's claims for Medicaid reimbursement of GME payments to the hospital did not fully comply with Federal law or the approved State plan. Of the $5,678,794 ($3,440,926 Federal share) claimed, $3,440,926 ($2,084,984 Federal share) was allowable, and the remaining $2,237,868 ($1,355,942 Federal share) was not allowable. Specifically, the State agency was not entitled to claim certified public expenditures as the State share of GME costs. In addition, we were unable to determine what portion of the certified public expenditures, which were intended for the care of indigent children, related to the provision of GME.

We recommended that the State agency (1) refund to the Federal Government the $1,355,942 in GME overpayments to the hospital during State fiscal years 1999 through 2001, (2) follow Federal requirements and the State plan when claiming GME costs in the future, and (3) review claims for GME subsequent to our audit period and refund any portion that did not comply with Federal requirements and the State plan. The State agency disagreed with the first recommendation but agreed with the two remaining recommendations.