Financial Management:

Oversight of Small Facilities for the Mentally Retarded and Developmentally Disabled

AIMD-94-152: Published: Aug 12, 1994. Publicly Released: Sep 13, 1994.

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Pursuant to a congressional request, GAO provided information on federal and state oversight of facilities providing residential and other Medicaid funded services to people with mental retardation and developmental disabilities (MR/DD), focusing on small private and nonprofit intermediate care facilities (ICF) in Colorado, Michigan, and New York and facilities providing residential and other services under the Medicaid Home and Community Based Service Waiver.

GAO found that: (1) in the states visited, most MR/DD providers are required to have financial audits performed by an outside agency; (2) to provide program oversight, cognizant federal and state agencies inspect ICF and those facilities providing residential and other services under the Medicaid waiver program; (3) although facility inspections are being performed as required, some deficiencies could be corrected by giving more attention to followup procedures; (4) instances of possible fraud and abuse in ICF and Medicaid waiver program facilities in the states visited are investigated only when cognizant federal or state officials receive an allegation or referral; (5) although medical fraud control units have not identified any fraudulent schemes occurring on a national scale, the units have reported several types of fraudulent or abusive activities that are common to many states; (6) providers found guilty of fraud or other program abuses can be excluded from receiving Medicaid funds; (7) the Department of Health and Human Services maintains and distributes a nationwide database, based on input from federal, state, and local officials, of the excluded providers; and (8) officials in the states visited identified several program features that they believe help ensure financial and program integrity, such as fixed reimbursement rates, program oversight by case managers, and limitations on the number of facilities a provider can operate.

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