MEDICAID CREDIT BALANCES 

HOSPITAL ACCOUNTS

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OFFICE OF INSPECTOR GENERAL 
OFFICE OF ANALYSIS AND INSPECTIONS 
MARCH 1989  MEDICAID CREDIT BALANCES 

HOSPITAL ACCOUNTS

Richard P. Kusserow 
INSPECTOR GENERAL 
o A 1-07 -88-004 70  MARCH 1989  EXECUTIVE SUMMARY 
PURPOSE 
The purpose of this national inspection was to determine the dollar amount of Medicaid credit 
balances that exist at Medicaid-participating hospitals. In addition , the inspection identified 
policies and procedures which may be a factor in creating these credit balances, or in delaying 
refunds by the hospital or recovery of these funds by Medicaid State agencies in a timely man
ner. 
BACKGROUND 
The Social Security Act and Federal regulations provide that Medicaid payments may be 
made only when there is no third party liable for payment of services. Where a third pany 
makes payment in addition to Medicaid, or the Medicaid payment is in excess of the amount 
due the hospital or a duplicate payment, a credit balance is created. This amount must be 
reponed or refunded in a timely manner to the Medicaid program. After being notified of a 
credit balance, the Medicaid program must act promptly to recover or adjust this amount. 
The Inspector General has conducted inspections of hospital Medicare credit balances since 
1985. This earlier work suggested a pOtential for substantial Medicaid credit balances nation
wide. 
METHODOLOGY 
This national inspection included reviewing patient accounts in a randomly selected group of 
50 hospitals in five States. The States selected were California, Michigan , New York , Ohio, 
and Texas. Forry-eight percent of Medicaid hospital inpatient payments are made to hospitals 
in these five States.

FINDINGS 
Projected Medicaid Credit Balances are Substantial 
We identified Medicaid program credit balances of $723, 800 ($399 355 Federal share) in a 
total of 401 credit balance accounts reviewed. The credit balances found in the sampled hospi
tals in each State were then projected to the entire universe of Medicaid-panicipating hospitals 
in each sampled State , producing tOtal projected credit balances for the five States' of 
$16 369,967 ($8,970,198 Federal share). 
If all the conditions existing in the 5 sample States were found to exist in all 50 States. the 
tOtal projected credit balances to the Medicaid program could be as much as $34 
104. ()l) 
($20 663, 673 Federal share).  Hospitals are not Reporting Credit Balances in a Timely Manner 
Fony-five days was considered to be a reasonable time period for hospitals to notify a State 
agency or fiscal agent that a Medicaid credit balance exists and should be recovered. The in
spection reviewed the procedures pertinent to record-keeping processes at the sampled hospi
tals. Based on this information , the hospitals should be able to make notification within this 
time period. Sampled hospitals had notified the State agencies of the patient credit balances in 
267 (67 percent) of the 401 accounts reviewed. In 73 (27 percent) of these cases , the hospitals 
notified the State agencies within 45 days of identifying the credit balances, and in 194 (73 
percent) of the cases, hospitals took in excess of 45 days to nOtify the State agencies. Three 
States had 158 credit balances (81 percent) for which nOtices were issued to the State agencies 
over 45 days after the credit balances occurred. In 3 States, the hospitals did not repon 
119 of 
the 134 credit balances (89 percent) to the State agencies. 
State Agencies and Fiscal Agents are not Reco).'ering Credit Balances in a Timely Manner 
Ninety-six percent of the Medicaid credit balances reponed were not recovered by the State 
agencies within 60 days of the hospital's notice. We established 60 days as a reasonable time 
period for a State agency or fiscal agent to take recovery action on a Medicaid credit balance 
after being notified by a hospital. The 60-day period is consistent with the time frame in sec
tion 95 I 2, the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, Public 
Law 99-272. This section of the act addresses the State agency s responsibility to recover an 
overpayment--once identified--from a person or entity in a 60-day period before a reduction is 
made in the Federal payment to that State equal to the amount of the overpayment. A review 
of inspection data indicated that two States made about 75 percent of the recoveries , while the 
other three States recovered the remaining 25 percent. 
RECOMMENDATIONS 
The Health Care Financing Administration (HCFA) Should Take Action to Recm' er or Ad
just Credit Balances 
The HCFA should instruct the sampled State agencies to recover or adjust actual and 
projected credit balances identified by this inspection. Also, national savings in excess 
of $34 million are projected if all States were directed to recover or adjust outstanding 
credit balances. 
The HCFA Should Establish and Enforce Time Frames for Reporting 
and ReCOJ'erillg 
Credit Balances 
The HCFA should develop regulations and policy guidelines that provide for timely 
reponing of credit balances by hospitals and recovery of credit balances from State 
agencies. We recommend n) that hospitals 
be required to report credit balances to SUt\. 
agencies within 45 days from their occurrence, and (2) that HCF A enforce the COB R.  requirement that State agencies refund credit balances within 60 days after being 
notified by hospitals. 
State agencies could detect Medicaid credit balances through review of hospital records 
on a special request or periodic basis. Recovery could be carred out through 
procedures such as utilizing the Form HCFA-64 quarerly expenditure report for credit 
balance information and assessing interest on the Federal share of credit balances not 
reported in a timely manner. 
AGENCY COMMENTS 
The HCFA reviewed the report and generaIly agreed with the Office of Inspector General. 
The HCFA undertook a number of initiatives to address the presence of Medicaid credit 
balances in hospitals. These efforts focused on conducting hospital reviews, developing 
regional office guides, and establishing a monitoring system for State coIlection efforts. The 
HCFA also made several observations on the report. They addressed causes of credit 
balances, State monitoring mechanisms, foIIow-up actions on specific States mentioned in the 
report, and reiteration of existing HCFA policy and procedures related to credit balances. Our 
offce provided assistance to the Kansas City HCFA regional office in their efforts to conduct 
reviews and identify credit balances in hospitals. 
In general, we agree with HCFA' s comments and have modified our recommendations accord
ingly. However, HCFA disagreed with our recommendation to establish time frames for 
reponing and refunding credit balances. We continue to believe that time frames would 
ensure prompt recovery of these Medicaid funds. 
111  y .................................................... ................... ............................................................. ........... .............................

................................................................................... ........ 
TABLE OF CONTENTS 
EXECUTIVE SUMMARY 
N .......................... 
I NTROD UCTIO 
............................................................................. 1 
Pu rpose 
................. 1 
d .......... .............. ............. 
Backg ro un 
Methodo I  .................................... ............................ 1
og 
FI N DI 
NGS  ................................................................................................................. 4

R ECOM MEN DA 
TIONS  ............................................................................................. 7

A .................................. ....... 

APP EN DIX 

Tables 
APP EN DIX  B ...................................... ................... ............................................. 
 .:5
HCFA' s Comments  INTRODUCTION

PURPOSE 
The purpose of this national inspection was to determne the doIlar amount of Medicaid credit 
balances at a randomly selected sample of Medicaid-paricipating hospitals in five States. In 
addition, the inspection was conducted to identify any policy or procedural weaknesses which 
may be factors in the creation of credit balances. Delays by hospitals in reponing or refunding 
credit balance amounts, and delays by the Medicaid State agencies or fiscal agents in recover
ing or adjusting credit balances, were also examined. 
BACKGROUND 
The Social Security Act provides for payments to States, on the basis of a Federal medical as
sistance percentage, for part of their expenditures for services under an approved Medicaid 
State plan. The Federal-State match is computed by a formula takng into 
consideration the 
relationship of a State s per capita income to the national average per capita income. Under 
the formula, the Federal portion of the match cannot be less than 50 percent or more than 83 
percent. These Federal medical assistance percentages are recalculated on an annual basis. 
Section 1902(a)(25) of the Social Security Act provides that the State or local agency ad
ministering the Medicaid program wil take all reasonable measures to determne the legal 
liability of third paries to pay for care and services arsing from injury, disease, or disability. 
A Medicaid State agency is defined as the entity established or designated to administer the 
State s Medicaid program, which includes processing and paying vendor claims. A fiscal 
agent is defined as an entity under contract with the State agency to process and pay vendor 
claims for services and items covered by Medicaid. 
Federal regulation 42 CFR 433. 139 outlines provisions the State agencies must foIIow in pay
ment of claims where a third party has liability for payment. In most cases, the Medicaid 
program has payment liability only for that portion of the patient s biI not covered by third-
party resources, such as health or accident insurance, workers ' compensation , Veterans Ad
ministration, Medicare , or other primary coverage. When a third party and the Medicaid 
program both pay for the same services, a Medicaid credit balance is created, which is 
reflected on the patient s ledger account at the hospital. Among the other causes of Medicaid 
credit balances are Medicaid payments in excess of the amount due and duplicate Medicaid 
payments for the same services. 
Both the State agency or fiscal agent, and the hospital, have responsibilities when credit balan
ces are created and identified. The hospital must report or refund the amount of the 
credit 
balance to the a!!ency or agent within a " reasonable time" after its identification. Sub
sequently, the agency or agent must recowr or adjust future hospital payments in the amount  :,,
of the credit balance in a timely manner. It is essential that credit balances be identified and 
recovered. When those responsibilities are not met , both the Federal and State governments 
incur losses. 
The Office of Inspector General (OIG) has studied this issue in the past. 
For example: 
A 1985 OIG regional inspection of Medicare credit balances was expanded to a national 
inspection (Credit Balances in Medicare Beneficiary Hospital Accounts 
#OPI-85- 040). The result of this national inspection was a projected amount of 
Medicare credit balances in excess of $164 milion for all participating hospitals. 
More recently, a regional review of patient accounts in three large metropolitan 
was conducted to determine the extent and age of any existing Medicaid credit 
hospitals 
balances. The analysis of documentation and conversations with hospital personnel 
during this review resulted in the discovery of outstanding Medicaid credit balances in 
excess of $300 000. Further, it was determined that almost two-
thirds of the 
outstanding credit balances were over 6 months old. Since this was a preinspection or 
informal review, no report was issued. 
These previous activities indicated that a national inspection would reveal substantial credir 
balances in Medicaid-
participating hospitals. 
METHODOLOGY 
A sample of hospitals was chosen from the universe of all Medicaid-
participating hospitals in
each of five States selected for review. These States are: California
, Michigan , New York
Ohio , and Texas. 
These States were selected for review because they made a substantial amount (48 percent) of 
the Medicaid medical vendor payments for inpatient services in general hospitals in Fiscal 
Year 1986. These five States were paid $5,004,722 371 out of the national total of 
$10 369 810 730. 
In each State, 10 hospitals were selected using simple random sampling stratified by bed sizc. 
The final sample was comprised of 10 hospitals with less than 100 beds
, 16 hospitals with De-
tween 100 and 399 beds, and 24 hospitals which had 400 or more beds. 
Each hospital in the sample was requested to provide the OIG with listings of outstanding 
Medicaid credit balances through October 3 I , 1987. Patients with Medicaid payments  ndn 
1I 
$50 were excluded. Based upon those lists, samples of up to 50 
patients were selected. ror
each of the patients selected, the hospitals provided copies of patient ledger records for 
rn 1,,
to validate the Medicaid credit balance. Based upon the number of accounts to be 
re\"ie\\ l'd. 
some patient ledger accounts were,
reviewed at the hospital and the others were provided II) !" 
01G by mail. Analysis of the patient ledger accounts was done to determine the existelkl
' I':  valid Medicaid credit balance and the amount of the credit balance. 
Funher review deter
mined the date the hospital notified the State agency or fiscal agent of the existence of the 
Medicaid credit balance, and the length of time it took the agency or agent to recover or adjust 
the amount of the Medicaid credit balance.  FINDINGS 
Projected Medicaid Credit Balances are Substantial 
The inspection identified 401 credit balance accounts totaling $723, 800 ($399 355 Federal 
share) to be hospital credits due the Medicaid program (appendix A, table I). Of the 401 ac
counts, the State agency was notified of the existence of a credit balance on 267 accounts. 
Credit balances on the other 134 accounts were identified only as pan of this review. These 
Medicaid credit balances resulted from third-pany payments, duplicate payments , and pay
ments by the State agency or fiscal agent in excess of the amount due to the hospitals. 
Projecting the amount of Medicaid credit balances for each sample State to all Medicaid-par-
ticipating hospitals in each State resulted in total estimated credit balances in the five States of 
$16 369 967 ($8, 970, 198 Federal share). 
Assuming all conditions relative to the five sample States exist in all the States, the projected 
credit balances to the Medicaid program could be as much as $34 104 098 nationally 
($20,663 673 Federal share). See appendix A, table II. 
Hospitals are not Reporting Credit Balances in a Timely Manner or Not Reporting Any 
Credit Balances at All 
It was determined that numerous hospitals in the sample were not prompt in advising the 
State agency or fiscal agent when Medicaid credit balances occurred and, in many cases, had 
not notified the agency or agent at all. 
This inspection reviewed the record-keeping processes at the sample hospitals. We found that 
the hospitals ' procedures should enable them to make notification of a credit balance within 
45 days of the date the balance occurred. This would be a reasonable time period for hospitals 
to notify a State agency or fiscal agent that a Medicaid credit balance had been created and 
recovery should be made. This inspection did not include onsite reviews at State agencies nor 
did it involve reviewing Fonn HCFA-64 quanerly expenditure repons. In 73 percent of the 
cases, the hospitals exceeded the 45 days (appendix A, table III). Eighty-one percent of these 
cases in which notices were issued more than 45 days after the credit balances occurred were 
found in Michigan, New York, and Ohio.  Figure 1

TIMELINESS OF HOSPITAL NOTIFICATION TO STATE 
OVER 45 DAYS 
0 - 45 DAYS
73% 
27% 
Hospital Credit Balances with Notices - 267 
In 33 percent of the credit balances reviewed, the hospitals were found not to have notified the 
State agency or fiscal agent that a Medicaid credit balance ever existed (appendix A 
, table IV). 
Inspection data also indicated that in California, Michigan, and Ohio, 89 percent of credit 
balances (119) were never reported by the hospitals to the State agencies. 
Currently, no incentive exists for hospitals to identify credit balances. Although hospitals 
have a responsibility to report credit balances, the inspection found that hospitals gave a low 
priority to this function. 
State Agencies and Fiscal Agents are not Recovering Credit Balances in a Timely Manner 
The inspection revealed that State agencies or fiscal agents were not diligent in recovering or 
adjusting the 267 credit balance accounts after notification by the hospitals. This was true 
even when hospitals issued several notices. A comparative time frame appears in section 
9512, the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, Public Law 
99-272. The act indicates that 60 days is the time period for a State agency or fiscal agent to 
recover overpayments for refund to the Health Care Financing Administration (HCFA). This 
section of the act speIIs out the State s responsibility to recover an overpayment, once iden
tified, from a person or entity in a 60-day period before a reduction is made in the Federal pay
ment to that State equal to the amount of the overpayment. Data show that 96 percent of the 
credit balances were not recovered within 60 days of nOtice by the hospital. Inspection data in
dicated that California and New York made about 75 percent of the recoveries, while the other 
three States made the remaining 25 percent of the recoveries. Numerous cases existed where 
the time period for recovery far exceeded the 60-day period (appendix A, table V). The age of 
credit balances for all sample States is shown in appendix A, table VI.  Figure 2

TIMELINESS OF CREDIT BALANCE REC. JVERY 
FOR THE SAMPLED STATES 
OVER 60 DAYS 
96%  EZ 0 - 60 DAYS 
Credit Balances with Notices sent  by  the Hospitals 
to the States - 267/401  RECOMMENDA TIONS 
The HCFA Should Take Action to Recover or Adjust Credit Balances 
The HCFA should instruct the sampled State agencies to recover or adjust actual and 
projected credit balance accounts identified by this inspection. NationaIly, the projected 
program savings would exceed $34 milion if all States were directed to identify and 
recover or adjust outstanding credit balances. 
The HCFA Should Establish and Enforce Time Frames for Reporting 
and RecoJ.ering
Credit Balances 
The HCF A should enfore the COBRA provision (section 9512) which requires 
 tates to 
refund any outstanding credit balances. This could be more effectively accomplished by 
issuing regulations or guidelines setting specific time frames for action by hospitals and 
States. For example: 
Hospitals could be required to report credit balances to State agencies within 45 
days beginning with the date the credit balance occurs. 
State agencies could be required to refund credit balances to HCFA within 60 
days after notification by hospitals that a credit balance exists
, in compliance
with COBRA. 
State agencies could detect Medicaid credit balances through review of hospital records 
on a special request or periodic basis. (The Medicare program has effectively utilized 
programs of special reviews and reviews of provider records conducted during cyclical 
audits. 
Procedures that HCFA could utilize to 
carr out recovery and reponing of program 
credit balances include the following examples: 
utilizing the Form HCFA-64 quarterly expenditure reporting process as a 
mechanism to obtain credit balance information 
, and 
assessing interest on the Federal share of credit balances not reported i: 
a t i 11(' I 
manner.  AGENCY COMMENTS 
We solicited and received comments on the draft report from HCFA. They indicated agree
ment that credit balances are a problem which requires attention and indicated several initia
tives begun or to be implemented to identify and recover credit balances. One of these 
initiatives involved the review of two States for identification of outstanding Medicaid credit 
balances. After a successful initial review in Region VI , several additional States have been 
selected for HCFA' s expanded study. They have developed a guide to assist regional offices in 
recovering credit balances as well as expanding upon policy and procedures to focus on credit 
balances. The HCFA commented on the causes of credit balances and also indicated that im
mediate follow-up action was being taken with States identified in this report. In addition 
HCFA' s position on implementing current law on the coIlection of overpayments was 
referenced. A copy of HCFA' s response to the draft report is included in the appendix. 
The HCFA has taken initiatives to identify Medicaid credit balances in selected States. The 
HCFA Kansas City Regional Office requested the assistance of the OIG Regional Office of 
Analysis and Inspections in preparng a regional contract proposal which would be utilized to 
review hospital records for Medicaid credit balances. Our office provided a brief summary of 
the activity to identify hospital credit balances. In addition, we outlined our methodology of 
identifying the existence of Medicaid credit balances in a hospital in the Kansas City Region 
which was not part of the sample of States utilized for this inspection. 
OIG RESPONSE 
We are in general agreement with HCFA' s comments. We have modified our recommendation 
to include enforcement of the recovery provisions under section 9512 of COBRA. Hov,, ever. 
we continue to believe that establishing time frames within which credit balances must be 
reported by hospitals and refunded by States would have the effect of ensuring timely 
recovery of Federal funds.  APPENDIX A 
TABLES 
TABLE I 
Medicaid Credit Balances Identified in Hospital 
Inpatient Records in Sampled States 
Total 
Number 
Third-Party  Duplicate  Other  Total State 
State  Balances  Payer  Payments  Payments  Payments 
$ 99,913  $ 1 654  $ 23 858  $125,425 
101  268,426  877  089  290, 392 
053  651  184  888 
105  105 593  15, 274  262  188, 129 
7,497  10,421  048  966 
TOTALS  401  $572,482  $ 38 877  $112,441  $723 800 
*Primarily payments by the State agency or fiscal agent in excess of the amount due the hospitals.  TABLE II 
Projected Credit Balances 
Sample  State  State  Federal  Federal  Projected 
States  Percent  Share  Percent  Share  Balances 
50.  602 085  50.  602 085  204 170 
43.  744,168  56.48  561 366  305 534 
50.  315 236  50.  315,236  630,472 
40.  575,058  59.  275,939  850 997 
43.  163,222  56.  215,572  378,794 
Total  399 769  $8,970 198  $16 369,967 
Within each State , the projections were made by multiplying the average dollar amount of 
credit balances found in tile sample times the number of hospitals in the appropriate strata. 
The varances have been calculated using the appropriate equations for each State and for the 
total of the five States. 
If similar circumstances existed in all the States as were found in the five sample States, which 
represents 48 percent of vendor payments in Fiscal Year 1986, as much as $34 104 098 
($20,663, 673 Federal share) in credit balances may exist nationaIly. 
The Federal medical assistance percentages are established in conformance with criteria in sec
tion 1902(a)(2) of the Social Security Act; they vary for each State. 
NOte: The current rate (Fiscal Year 1989) is the basis for refund purposes. Refunds are made 
at the rate currently in effect, rather than the rate at the time the credit balance was created.  TABLE II 
Time Period Within Which Hospitals Notified State Agency/Fiscal Agent 
of Medicaid Credit Balances 
TOTAL NUMBER  NOTICES CONSIDERED 
OF NOTICES ISSUED  TIMELY (0-45 DAYS) 
BY HOSPITALS  (27% OF NOTICES ISSUED) 
Percent  Dollar 
Number of 
Amt. of 
Percent  Notices  Notices  Cr. Bal. 
No. With  Issued  Issued  Notices 
No. of 
Credit  Notices  Notices  (0- (0- (0
State  Balances  Issued  Issued  Days)  Days)  Days) 
$31  132 
101  128 
25,472 
105  328 
880 
Total  401  267  $106 940 
Days) 
Notices Not Considered Timely (Over  45 
(73% ot Notices Issued) 
Percent of  Dollar Am/. 
No.  Notices 
ofCr. Bal. 
Notices  Issued  Notices 
Over 45 
Over  45  Over 
State  Days  Days  Days 
$ 62,263 
216,009 
70,223 
91,541 
535 
Total  194  $446,571 
Notices were issued by hospitals in  67  perc:enl of the credit balances reviewed. 
I I
 TABLE IV 
Medicaid Credit Balances in Which No Notice Was Issued to the State 
Agency/Fiscal Agent by the Hospital 
Number  Balances  Dollar Amount  Average 
with No  Dollar 
of No 
State  Balances  Notices  Notices  Amount 
$ 32 030  $ 915 
101  65,255  250 
193  439 
105  56,260  023 
551  1,455 
Total  401  134  $170,289  271 
No notices were issued by hospitals in  33  percent of the credit balances reviewed.  TABLE v

Time Period Within Which State Agency/Fiscal Agent 
Recovered/Adjusted the Medicaid Credit Balance 
Dollar  Number  Dollar 
Number of  Number of  Amount  for  Amount for 
Number of  Notices  Recoveries  of Recovery  Recovery  Recovery 
Credit  Issued by  Within 60  Within 60  Over 60  Over 60 
State  Balances  Hospitals  Days  Days  Days  Days 
$ 3, 138  $ 90, 257 
101  346  203 790 
338  358 
105  180  131 689 
-0- 7,415 
Total  401  267  $26,002  256  $527,509 
Ninety-six percent of credit balances were not recovered within 60 days after notifcation by the 
Iwspital.  TABLE VI 
Age of Outstanding Medicaid Credit Balances 
(Dollar Amounts) 
31 61- 91-180  Over 180  Total 
State  Days  Days  Days  Days  Days  Payments 
$ 8,029  $13,715  $ 4 872  $ 7,350  $91,459  $125,425 
065  544  315  27,731  198,737  290,392 
500  710  531  19, 357  790  888 
536  - 0  672  16, 651  169,270  188 129 
707  1,497  388  202  10, 172  966 
$67 837  $45,466  $50 778  $74 291  $485,428  $723, 800 
(9.4%)  (6. 3%)  (7. 0%)  (10.3%)  (67. 0%)  (100%) 
*This column represents those balances outstanding which exceed 180 days but represent a loss to the 
Medicaid program in that Federal and State monies have not been recovered.  APPENDIX B

HCFA' s COMMENTS  ---- 
. --
-----
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H.:i  ealth (I- rr-e / .7.
DEPARTMENT OF HEALTH &. Ht..'-A  SERVICES 
F,niic'ng Adm,n'stra:,o-

N.; 
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-- ;EC

Dlte  crFlCf. Dr !"F 
ERAL 
From  Wi1  m L Roper, M.D. /  -8 
Adm1n1Strator  1988 DEC  PH 2: 17 
OIG Draft Report: II  ECIV
SubJect  OAI -07 -88-00470  Medicaid Credit Balances in Hospital  Acc 
The Inspector General
 DEe  1. - 19;;( 
Offi ce of the Secretary 
OFFICE OF 
INSPECTOR 
GENF. 
We reviewed the draft report and agree, in principle, with the OIG. 
presence of credi t bal ances in the Medi cai d accounts recei vabl  The
e of
providers (particularly hospitals) is a problem requiring HCFA'

fact, we 
attention. 1n  recently undertook a substantial Medicaid 
financial management initiative to explore this problem. Following 

brief chronology of our efforts:  is a

During Fiscal Year (FY) 1987, Region VI contracted with an

accounting firm to identify and analyze Medicaid and Medicare

credit balances maintained by hospitals in Oklahomand
Louisiana. Six 
hospitals were reviewed in each State. The 
reviews resulted in questioning $388,
962 in Federal financial

participation (FFP) in Oklahoma, and $519,
718 FFP in Louisiana

for Medicaid credit balances alone. 
Because of the success of the Region VI contract reviews, eight

more reviews of hospital credit balances are scheduled for FY

1989. The  review are Maryland, Virginia,
States planned  for
South Carolina, Texas, Missouri
, California, Oregon, and the
District of Co1umbJa.

On September 29, 1988, HCFA issued a Financial Managemnt Review
Guide for Provider Maintained Credit Balances in Medicaid

Accounts Receivable. The guide  liability,
explores third party 
overpayment, and cost reimbursement policy affecting this 
issue
and provi des procedures to the  offi ces for 
regi ona 1  conduct; ng
i ews. 
these  rev 
In addition, as part of our State Performance Evaluation and

Comprehensive Test of Reimbursement Under Medicaid 
(SPECTRUM;
program, we monitor the collection efforts of the States 

recovering known Medicaid credit balances. 
During FYs 
1987 d
1988, several of our SPECTRUM reviews focused on these

overpayment situations.

DIG 
ADM 
OGC!1G 
EX SEC 

DATE S7  . J