MDHHS Cost Report Audit and DCW Review Reminders 

The Michigan Department of Health and Human Services (MDHHS) recently provided updates on cost report audits and direct care wage (DCW) reviews, including the following information: 

FY22 Cost Report Audits: MDHHS is currently working on 133 FY22 Cost Report audits across the state. The department reports that it is committed to working through these audits efficiently, as they will be used for Fiscal Year 2022 and Fiscal Year 2024 final per-diem rate setting. These audits may feel more involved than they were in recent years because FY20 and FY21 Cost Report audits were limited-scope audits that focused only on the “Plant Cost component.” The FY22 audits return to traditional scopes and audit requests. With this, the audit timelines noted in bulletin MSA 19-28 must be followed.

Direct Care Wage Reviews: MDHHS audit teams have also begun work on Direct Care Wage reviews. Audit procedures will occur in conjunction with Cost Report reviews and will include a reconciliation of DCW payments to the Cost Report offset amount and sampling of individual DCW reimbursement request forms. Documents that may be requested include payroll records, position descriptions, timesheets, time studies, etc. If overpayments or unsupported payments are identified, MDHHS will issue recoupment invoices.