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South Carolina Claims Unallowable Costs Under Waiver

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South Carolina Claims Unallowable Costs Under Waiver

September 19, 2012

A report released by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) found that South Carolina claimed Medicaid reimbursement for $6.7 million ($4.8 federal share) worth of unallowable room-and-board expenses under a waiver program operated by the state's department of health and human services (state agency).

The state agency contracted with the South Carolina Department of Disabilities and Special Needs, which in turn contracted with 39 local disabilities and special needs  (DSN) boards to provide long-term care and support for individuals with intellectual or related disabilities.

The OIG found that the state agency claimed unallowable room-and-board costs because neither the state agency nor the department had taken adequate measures to ensure that the department followed applicable federal law and guidance or its own guidance, or to detect errors or misstatements on local DSN boards’ cost reports. In addition, the department did not prescribe a uniform format for the local DSN boards to follow when preparing cost reports.

The OIG made several recommendations, including:

  • Refunding $4.8 million to the federal government, which represents the federal share of the room-and-board costs that the department improperly claimed on its waiver cost reports;
  • Instructing the provider to follow federal law and its own guidance and remove room-and-board related administrative and general costs from future waiver program cost reports;
  • Instructing the department to develop a uniform cost reporting process and require each local board to follow this process;
  • Instructing the department to strengthen its cost report review procedures to ensure that it will detect errors or misstatements on the local DSN boards’ cost reports; and
  • Strengthening its own procedures for reviewing the waiver cost reports submitted by the department.

The state agency concurred with the OIG recommendations and said that it would work with the Centers for Medicare & Medicaid Services to negotiate repayment of the improperly claimed room-and-board costs.