North Carolina Improperly Claimed Federal Reimbursement for Some Medicaid Nonemergency Transportation Services

The North Carolina Department of Health and Human Services (State agency) claimed Federal Medicaid reimbursement for some nonemergency medical transportation (NEMT) services that did not comply with Federal or State requirements. Of the 200 sample items, 82 complied with Federal and State requirements, but 118 did not. Of the 118 items, 48 contained more than 1 deficiency. On the basis of our sample results, we estimated that the State agency improperly claimed at least $18.7 million ($12 million Federal share) for unallowable NEMT services for the audit period.

The State agency also improperly claimed $20 million in NEMT administrative expenditures at North Carolina's Federal medical assistance percentage (FMAP) rate, instead of the 50-percent administrative rate, which resulted in excess Federal reimbursement of $3.1 million.

Additionally, none of the 16 counties represented by the 200 items in our sample fully complied with the State agency's NEMT policy. The counties could not provide evidence that certain NEMT services met all policy requirements for safety and risk management, which potentially compromised the safety of Medicaid beneficiaries.

These deficiencies occurred because (1) the State agency's design of the NEMT program did not promote effective oversight of transportation services for compliance with certain Federal and State requirements and (2) the State agency's reimbursement process was to incorrectly claim certain NEMT administrative costs at the FMAP rate.

We recommended that the State agency (1) refund $12 million to the Federal Government for unallowable NEMT services identified in our sample; (2) refund $3.1 million to the Federal Government for the additional Federal reimbursement received for NEMT expenditures improperly claimed at the FMAP rate; (3) improve the design of the NEMT program to enhance oversight of transportation services for compliance with Federal and State laws, regulations, and program guidance; (4) monitor the results of the counties' reviews of transportation services and vendors to identify and correct deficiencies; (5) update its procedures for claiming Federal reimbursement for NEMT administrative costs to ensure that it claims expenditures at the proper reimbursement rate; and (6) implement regulations requiring safety and risk management measures as conditions of payment. The State agency generally disagreed with our findings and recommendations but agreed that our report identified some areas for improvement.