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EXECUTIVE SUMMARY:
The objectives of this audit were to determine whether mandatory denial of payment remedies for substandard quality of care was applied to nursing homes that were not in substantial compliance with the prescribed Medicaid participation requirements and to evaluate whether State controls were adequate to prevent improper Medicaid payments to nursing homes under the denial of payment remedy. Our audit included denial of payment sanctions, which were in effect or should have been in effect from October 1, 1999 to September 30, 2001. From a statistical sampling of 100 payments to nursing homes under sanction, we found 24 unallowable payments to 15 homes, totaling $31,598 ($17,564 Federal share). Based on the results of the statistical sample, we estimate unallowable Medicaid payments of $509,670 (Federal share $280,879) were made to nursing homes under the denial of payment sanction. We recommended the State refund reported overpayments, identify and refund additional overpayments, and implement procedures to ensure unallowable payments to providers are suspended timely. State agency officials agreed with the findings and generally agreed with all three recommendations.