Missouri’s Billing of Medicaid is Disputed

March 29, 2010

The state of Missouri has over billed Medicaid by about $20.5million for administrative costs in schools associated with services for low-income students or those with disabilities, according to a federal audit released this week.

Although the audit recommends Missouri refund that amount,it’s now up to the federal Centers for Medicare & Medicaid Services to decide whether the money must be repaid. The state could appeal such a decision, a process that ultimately could put the matter before a federal judge.

The Missouri Department of Social Services disagrees with the auditor’s primary finding, according to a formal response to the audit from Director Ronald Levy.

Department spokeswoman Arleasha Mays defended the state’s billing methods Friday, saying officials followed federal instructions and"had approval to operate in the manner we did."

The alleged over billing centers on the methods used to calculate just how much time school employees spend handling the administration of the federal school-based health programs.

Many of the errors discovered in the audit involve work by a private company hired by the state and paid based on the increased federal funding the company brings into the state.

An auditor in the U.S. Department of Health and Human services reviewed Medicaid payments for administrative costs in the St. Louis Public and Springfield school districts for 2004-06.

Of the $15.3 million that Missouri claimed in Medicaid administrative costs for the St. Louis Public and Springfield districts during that time, $4.2 million was not eligible for federal reimbursement, the audit determined.

Based on the errors found in those districts, the auditor determined other Missouri school districts received $16.3 million in Medicaid payments for the same fiscal years that was not allowed.

The bulk of the alleged errors have to do with the way a company hired by Missouri calculated information from school districts.

Missouri Health Net, a division of the Missouri Department of Social Services, hired Virginia-based Maximus Inc. in 1999 to manage its Medicaid claiming program. Maximus determined the statewide percentages of time spent on Medicaid administrative activities by school districts and how much was eligible for federal reimbursements.

The state surveyed school districts to estimate a percentage of time spent on Medicaid administration each quarter. The audit discovered problems with how Maximus handled forms that were not returned. By excluding those forms, the audit alleges, the company inflated the administrative costs related to the Medicaid program.

A Maximus spokeswoman did not return a phone message Friday.

The contingency fee contract with Missouri stated that Maximus was to receive a fixed percentage of federal dollars ranging from 5.75percent to 7 percent depending on the fiscal year. School districts paid Maximus a combined total of $8.3 million during the audited years.

Maximus no longer has a contract with the Missouri Department of Social Services.

In total for the three audited years, Missouri claimed about$188.2 million for 50 percent reimbursement for administrative costs associated with school-based health services provided by 357 school districts.

The federal Department of Health and Human Services said the Missouri Department of Social Services did not have adequate policies and procedures to monitor the reimbursement program and ensure that all costs claimed met federal requirements. The audit recommended that the agency review all school district Medicaid administrative claims paid after March 2006 to determine whether similar errors were made.