Review of Medicaid Reimbursement Rate for School-Based Health Services in Maryland

EXECUTIVE SUMMARY:

The audit objective was to determine whether Maryland's claims for Medicaid reimbursement of school-based health services complied with the approved State plan and Federal requirements. Maryland did not comply with its approved State plan, which required that the State claim reimbursement for school-based health services based on cost. The State agency used a reimbursement rate of $82 per service but could not show that the rate was based on the cost of services. Because we could not review the data used to calculate the rate, we calculated a rate for each year in the audit period.

By claiming payment for services at its rate of $82, Maryland received reimbursement totaling $146,536,378 ($73,268,189 Federal share). Using the recalculated rates, we allowed $81,014,559 ($40,507,280 Federal share) of the $146,536,378. The $65,521,819 ($32,760,910 Federal share) difference represented an overpayment.

We recommended that the State agency: (1) refund $32,760,910 to the Federal Government for unallowable basic education costs included in reimbursement for school-based health services in State fiscal years (FY) 2002 through 2004, (2) determine the unallowable basic education costs included in reimbursement for State FY 2005 and make the appropriate refund, and (3) continue to work with CMS and the Maryland State Department of Education in developing more accurate school-based health service rates and make the necessary revisions to the State plan. The State agency agreed that the rate for school-based Medicaid services reflected unallowable education costs and that the rates should be reduced.