Sneak Preview: Pa. Agency’s Medicaid Training Costs Disallowed

July 8, 2015 | By Jerry Ashworth | Post a Comment

xgran_bookshot(The following was excerpted from an article in the Federal Grants Management Handbook.) The Department of Health and Human Services (HHS), Departmental Appeals Board recently upheld a Centers for Medicare and Medicaid Services (CMS) ruling to disallow more than $3 million in Medicaid reimbursements claimed by the Pennsylvania Department of Public Welfare from 1996 to 2011, citing that the state could not claim the costs provided for training to nursing home facilities as administrative costs under Medicaid.

In response to a 1993 CMS Region III project to reduce the rate of physical restraint usage in nursing homes, Pennsylvania implemented the Pennsylvania Restraint Reduction Initiative (PARRI) to provide training and support to long-term care facilities seeking to reduce their use of physical restraints. The Pennsylvania Department of Public Welfare, the state’s Medicaid agency, in 1996 issued a subaward using Medicaid-related funding to the Pennsylvania County Commissioner’s Association, which in turn procured a training services contract from Kendal Outreach LLC, which trained nursing home staff throughout the state on restraint reduction.

The costs were treated as administrative costs; however, such training costs are not allowable as administrative costs; they are generally covered as “medical assistance” expenditures. In 2012, CMS disallowed the $3.002 million in Medicaid reimbursement Pennsylvania sought for the nursing home training that was conducted under the subaward from 1996 to 2011. An HHS Office of Inspector General audit found that the administrative costs that were claimed under the PARRI subaward “were not reasonable and necessary for the proper and efficient administration of the state’s Medicaid program.” The audit also found:

  • the purpose of PARRI is to assist providers in their compliance with long-term care certification requirements and to improve the quality of care in nursing facilities, not to assist with the effective administration of the Medicaid program;
  • the claimed costs were for the training of nursing home providers and not for the administration of the Medicaid program; and
  • the PARRI contract costs do not constitute general administrative cost of the Medicaid program but constitute nursing facility overhead costs because the training was intended to support and augment the in-service training for nursing facilities and enhance their quality of service.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site).

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