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OIG Audit Finds No Problems with Medicaid Recovery Funding

Janice Simmons, for HealthLeaders Media, May 29, 2009

In its first audit of funds provided under the federal stimulus package, the Department of Health and Human Services' Office of Inspector General found that HHS had correctly calculated temporary increases in Medicaid's medical assistance percentages (FMAPs).

The Recovery Act provides fiscal relief to states to protect and maintain state Medicaid programs through temporary increases of the FMAPs. The federal government pays its share of the states' Medicaid costs based on the FMAP calculations. Sometimes, the FMAP can vary--depending on each state's relative per capita income.

The Recovery Act is providing about $87 billion in temporary additional Medicaid funding for the states through 2010. The Centers for Medicare and Medicaid Services made available to the states for the past two fiscal quarters approximately $15.2 billion in additional Medicaid funding based on the increased FMAPs.

Because the OIG audit found no discrepancies, OIG said in its report released yesterday that it was not making any recommendations to HHS at the current time in regard to the FMAPs. "We will continue to monitor HHS Recovery Act funds closely so that taxpayers can be assured that their monies are being expended appropriately," HHS Inspector General Daniel R. Levinson said in a statement.

In a separate OIG report also released yesterday, 40 states with capitated Medicaid managed care were found to be collecting encounter data from managed care organizations; however, usefulness of the Medicaid Statistical Information System was limited because CMS did not enforce encounter data requirements, the report said.

The MSIS must include encounter data to be representative of Medicaid beneficiaries because more than 65% of Medicaid beneficiaries receive all or part of their healthcare services through Medicaid managed care, the OIG report said.

Based on our findings, the OIG called for CMS to clarify and enforce existing federal requirements that states include encounter data in their MSIS submissions. In its comments to the draft report, CMS concurred with those recommendations. The OIG also recommended that CMS seek legislative authority to impose sanctions against states that fail to meet the MSIS reporting requirements for encounter data.


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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