CMS' proposed regulations on federal financial participation (FFP) target payments and expenditures made between state Medicaid agencies and other units of government that have resulted in double FFP payments for a single expenditure. The new regulations would strengthen documentation requirements for reimbursement of certified public expenditures (CPEs), limit payments to government-operated providers, and exclude from FFP any Medicaid funds returned by providers to the state.
Questionable FFP claims
Several units of government in addition to government-operated providers furnish covered services to Medicaid-eligible individuals. For example, many school districts provide screening services to school children that would be reimbursable as early and periodic screening, diagnosis and treatment services (EPSDT) when provided to Medicaid recipients. They may be counted toward the state's share as CPEs.
The law requires that federal Medicaid funds be spent only to reimburse states for spending on covered services provided to Medicaid recipients. When some of a public provider's services are not covered by Medicaid, those services are not eligible for FFP. Because of differences and inconsistencies among states in describing and categorizing expenses, and states' failure to verify that all CPE claims are limited to Medicaid services, auditors have difficulty aligning expenses to covered services and determining the actual cost to the government.
Clear definitions
For purposes of eligibility to support a state's claim for FFP, the proposed rule eliminates the use of terms such as "public agency" and limits the eligible public entities to "units of government." A unit of government must have "generally applicable taxing authority " or be a provider operated by a unit of government. The provider's funding must come from taxes raised and appropriated for that purpose, and the governmental unit must be responsible for the liabilities and deficits of the provider. A contractual arrangement to pay a provider for Medicaid services does not qualify.
Documentation requirements
Claims for reimbursement of CPE must be accompanied by auditable documentation that: (1) identifies the category of expenditure under the state Medicaid plan; (2) explains the qualifications of the unit of government for any exception to the statutory ban on provider-related taxes and donations; (3) demonstrates the actual expenditures of the governmental unit on the provision of Medicaid-covered services to Medicaid recipients or administration of the state plan; and (4) is subject to state audit and review.
Government-operated providers also must submit cost reports to the state Medicaid agency, which must review them to determine that all costs are properly attributed to Medicaid. All interim payments must be reconciled with the cost reports, which must be used to determine future interim payment rates. Payments to government providers for Medicaid activity would not be allowed to exceed the documented costs, except for payments to Indian tribes or tribal facilities and disproportionate share hospitals. The same rules would apply to the State Children's Health Insurance Program. The rule would apply to services rendered on or after September 1, 2007.
Source: Proposed rule, 72 FR 2236, Jan. 18, 2007.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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