Millions for Poor, Disabled Children Misspent, GAO Says

By Debra Viadero

A federal report on Medicaid in schools accuses states, districts, and private companies of improperly charging the federal government for hundreds of millions of dollars in payments earmarked for poor, disabled children.

In some cases, the report by the U.S. General Accounting Office concludes, states are keeping up to 85 percent of federal payments intended as reimbursements to school districts for the medically related services they provide. In others, says the report released last week, funds are diverted by private consultants who improperly charge contingency fees equal to as much as one-fourth of the Medicaid money they get for schools.

Such practices are rampant, investigators for the congressional watchdog agency say, because of weak oversight and mixed signals...