Review of New Jersey Medicaid Contingency Fee Contract Payments for the Period April 1, 1996, Through June 30, 2001

摘要

Pursuant to Title XIX of the Social Security Act, the Medicaid program provides medical assistance to low-income individuals and individuals with disabilities. The Federal and State Governments jointly fund and administer the Medicaid program. At the Federal level, the Centers for Medicare & Medicaid Services (CMS) administers the program. Each State administers its Medicaid program in accordance with a CMS-approved State plan. Although the State has considerable flexibility in designing and operating its Medicaid program, it must comply with applicable Federal requirements. In New Jersey, the Department of Health and Senior Services administers the Medicaid program, which sometimes includes contracting with consultants. Federal requirements provide that the costs of consultant services may not be claimed for Federal financial participation if they are contingent on recovery of costs from the Federal Government. In 1993, the State awarded a contingency fee contract to Health Care Resources, Inc. (HCR) for the purpose of identifying areas for additional or increased Federal funds under the Medicaid program. The contract period was for 1 year, beginning in February 1993. As a result of HCRs efforts, the State received additional Federal funds under the Medicaid program and then paid HCR a fee of $1,336,356. In 1996, the State awarded a contingency fee contract to Deloitte Consulting LLP (Deloitte). The purpose of the contract was to generate increased Federal reimbursement by identifying and submitting to the Federal Government unclaimed State expenses. According to the contract terms, Deloitte was to receive a payment ranging from 6 to 7.5 percent of any additional Federal funds recovered. As a result of Deloittes efforts, the State received additional Federal funds under the Medicaid program and then paid Deloitte a fee of $19,681,538. Pursuant to Office of Management and Budget (OMB) Circular A-87, States may charge contingency fees when reasonable in relation to the services provided and when not contingent on recovery of the costs from the Federal Government. Our objective was to determine whether the State improperly claimed contractors fees earned under contingency fee arrangements to the Federal Government under the Medicaid program.