Collaboration in Civic Spheres

DSHS Must Pay Back $8.4 Million For Medicaid Claims

by March 31st, 2011

SUMMARY: In response to a recently issued federal audit, Washington state’s Department of Social and Health Services will pay Medicaid back $8.4 million for improper reimbursement it claimed and received for family planning services and products. The mistakes occurred because work related to patient conditions such as lumbago, diabetes, hypertension – and for child care – was incorrectly classified as eligible for the 90 percent family planning reimbursement rate, rather than the 50 percent rate that actually applied. The federal audit suggests that similar overpayments likely also occurred before the period examined, and that DSHS should work with Medicaid to develop a best estimate of additional paybacks, even though the state says its new Medicaid Management Information System can’t examine those older claims.


  • The federal Medicaid program provides services to low-income or disabled individuals and is run jointly by the federal and state governments. In Washington state, family planning services through Medicaid include one comprehensive preventive medicine annual visit for women, contraceptive management and related medical visits for men, and for men and women, over-the-counter contraceptives, drugs, supplies and sterilization procedures that meet state guidelines. For providing these family planning products and services, the state is reimbursed at a 90 percent rate by Medicaid.
  • The parent agency of Medicaid is the U.S. Department of Health and Human Services and the office of its independent auditor, or Inspector General, periodically conducts financial assessments of its work focusing on “preventing fraud, waste or abuse and promoting economy, efficiency and effectiveness…”
  • Between October, 2005 and September, 2008 the state of Washington claimed $110 million – with $99 million, or 90 percent, reimbursed by Medicaid – for family planning services and supplies. In a recently-released audit, HHS reviewed a portion of those claims that didn’t at that time have approved diagnosis or classification codes for reimbursement at the 90 percent rate.

KEY LINK: “Review of Family Planning Services Claimed by Washington State,” Department of Health and Human Services, Office of Inspector General, February 24, 2011


  • The Washington state Department of Social and Health Services’s (DSHS) Medicaid Management Information System that was in use at the time, incorrectly processed a series of reimbursement claims to Medicaid for family planning services and products at a higher rate, 90 percent rate, than the 50 to 51.52 percent that should have been applied.
  • The questioned claims that were reimbursed at the 90 percent rate for actual family planning were instead for services or conditions including health supervision of an infant or child, plus diabetes, lumbago and hypertension.
  • All in all, from October, 2005 through September, 2008, by using improper reimbursement rate classification codes, the state’s DSHS’s overcharged Medicaid $8,132,237 for family planning medical services, and $325,932 in related supplies.
  • The audit by HHS’s Inspector General’s office directs Washington DSHS to pay back to Medicaid the total owed, $8,458,169. In a reply appended to the audit, DSHS pledges to pay the sum back and correct its accounting to Medicaid accordingly in a regular financial report for the first quarter of 2011, ending March 31.
  • The HHS audit also directs Washington DSHS to review Medicaid family planning claims prior to October, 2005 for similar mistakes resulting in reimbursements at a higher rate than allowed. DSHS replied that a new Medicaid Management Information System it implemented in May of 2010 won’t allow review of medical claims before December, 2005 or pharmacy claims before April, 2006.
  • The auditor states that nonetheless, Washington DSHS should work cooperatively with Medicaid to resolve that matter, perhaps by estimating the additional refundable amount based on available data.

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