CMS and Michigan Near Settlement on Investigation into Billing of School-Based Medicaid Services

CMS and Michigan have reached a tentative agreement that would end a long-running dispute over the state's alleged "padding" of Medicaid expenses with "questionable services," the Detroit Free-Press reports. From 1997 to 2001, CMS rejected $300 million sought by Michigan to reimburse intermediate school districts that provided health services to students covered by Medicaid. Under the program, used in several states, schools are reimbursed for enrolling children in Medicaid and then arranging doctor visits and providing vision and hearing tests, speech therapy and counseling services for them. However, a General Accounting Office report found that over the last few years, not all the money for which Michigan sought reimbursement actually went to health services for children. In 1998, for instance, only 30% of the $317 million that Michigan spent on school-based Medicaid programs went to children's health services, the GAO report said. Under the tentative settlement, which still needs approval from the U.S. Justice Department, CMS would pay Michigan $400 million of the $700 million the state billed for school-based services from 1997 to 2001. Michigan has not yet received that $400 million because the state stopped billing CMS for school-based Medicaid services after the investigation began and now has a backlog. Once those claims are paid, the state's net loss could be as low as $20 million, state officials said. Besides the monetary provisions, the settlement also would require the school districts to alter the way they provide services to Medicaid beneficiaries. The Free Press does not give any further details on what those changes would be.

Another Investigation
Besides investigating Michigan's billing practices, the federal government also is looking into whether Deloitte Consulting LLC improperly provided perks to officials from eight Michigan intermediate school districts who hired the firm to work on the school's Medicaid efforts. A September 2000 GAO report found that Deloitte spent $45,000 on sporting events for the school officials, possibly in violation of a federal law that prohibits government officials from "accept[ing] anything of value that is meant to influence business transactions worth more than $5,000" (Christoff, Detroit Free Press, 1/29).