Tennessee’s Medicaid program claimed $59.3 million in federal reimbursement for case management services provided to children who did not qualify for them, the HHS Office of Inspector General said in an audit report published Sept. 23.
The OIG’s recommendations are not final decisions, and CMS ultimately determines whether to pursue recovery.
Six notes:
- The audit covered targeted case management services, which help Medicaid enrollees get access to medical, social and educational services, billed by the state from October 2020 through September 2023. The state claimed $503.5 million for the services during that period, including $370.5 million in federal funds. All of the claims were billed under a single eligibility group for children in state custody or at serious or imminent risk of entering state custody.
- Of the 150 sampled claims, 43 involved children who did not meet the eligibility criteria for that group. Extrapolating from those results, the OIG estimated $80.4 million in improper claims, of which $59.3 million was the federal share.
- Thirteen of the improper claims involved children served by the state’s Department of Children’s Services whose own caseworker assessments rated their risk of entering custody as low or nonexistent. In one case, two in-home assessments conducted months apart both found no need for intervention and no risk, yet billing continued.
- The other 30 improper claims involved children enrolled in the Tennessee Early Intervention System, which provides therapy and developmental services to children up to age 3. Every sampled claim in that group was found to be improper. The state qualified those children based on developmental delays but never assessed whether they were at risk of entering state custody. CMS did not approve early intervention as its own eligibility group until April 2025, after the audit period.
- Tennessee disagreed with all 43 findings and both OIG recommendations, which included the refund and adding a step to verify eligibility before submitting claims. The state argued the OIG relied on the wrong assessment tool, that hotline intake screening already establishes eligibility, and that it had made a blanket determination that all children in the early intervention program were at serious risk of state custody. The OIG said the interagency agreement the state cited contained no such provision and that a developmental delay alone does not meet the eligibility standard.
- The OIG didn’t count claims for initial intake and assessment work against the state, acknowledging those services are billable while eligibility is being determined. The findings applied to ongoing case management billed after assessments showed children did not qualify.
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