Finding 1205098 (2025-004)

Finding Number- 2025-004 Group VIII Matching Agency Department of Health & Human Services Federal Program Medicaid Cluster ALN 93.778 Compliance Requirement Matching Type of Finding Internal Control over Compliance / Compliance Category Significant Deficiency Criteria Per 42 CFR §433 and the approved State Plan under the Medicaid program, federal reimbursement must be claimed using the appropriate Federal Medical Assistance Percentage (FMAP) applicable to each eligibility category. Under the Affordable Care Act expansion provisions, expenditures related to Childless Adults under Group VIII are eligible for a 90% FMAP during the audit period. However, expenditures related to the Parent/Caretaker eligibility category are subject to the regular FMAP rate applicable to the state during the audit period (approximately 76%–77.5%). Therefore, claims submitted to the federal government must properly distinguish eligibility categories to ensure the correct matching percentage is applied. Condition During our testing of federal reimbursement claims, we identified five (5) invoices in which the description of the expenditure referenced Group VIII, which includes the following eligibility categories: ✓ Childless Adults ✓ Children age 19–20 ✓ Parent/Caretaker All five invoices were claimed at the enhanced FMAP rate of 90%. However, Parent/Caretaker expenditures during the audit period were eligible only for the regular FMAP rate (76%–77.5%). As a result, expenditures that may have corresponded to Parent/Caretaker beneficiaries were included in claims submitted at the enhanced 90% rate without documented support demonstrating proper eligibility classification. Cause The condition resulted from system limitations and the absence of automated eligibility classification during the period prior to MMIS implementation. The lack of system functionality to segregate eligibility categories within Group VIII resulted in all related expenditures being claimed at the enhanced FMAP rate. Effect Claiming expenditures at an incorrect FMAP rate may result in: • Potential overstatement of federal reimbursement • Noncompliance with federal matching requirements • Risk of repayment to the federal government if amounts are determined to be ineligible. Questioned Costs Indeterminable Perspective Information Due to the absence of beneficiary-level segregation and supporting documentation distinguishing eligibility categories within Group VIII during the audit period, we were unable to determine the portion, if any, of the tested expenditures attributable to the Parent/Caretaker category that may have been claimed at an incorrect FMAP rate. Prior Year Audit Finding This is not a repeat finding. Recommendation We recommend that management: 1. Perform a retrospective analysis of Group VIII expenditures during the audit period to determine whether any Parent/Caretaker expenditures were improperly claimed at the 90% FMAP rate. 2. Quantify and return any overclaimed federal funds, if applicable. 3. Implement formal written procedures to ensure that eligibility categories are properly classified prior to submission of federal claims. 4. Ensure that the enhanced MMIS segregation controls implemented in Q3 2024 are formally documented and subject to periodic supervisory review. Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.