No, generally, States that employ a State plan payment methodology that reimburses a provider for the actual cost of Medicaid services and/or administrative activities may not use a fee schedule rate as a proxy for cost. Instead, states must use cost identification methodologies and supporting documentation methods that are consistent with the requirements of 45 C.F.R. Part 75 and approved by CMS.
When a State relies on a unit of government to fund the non-federal share of Medicaid expenditures through a Certified Public Expenditure (CPE), the reimbursement to the provider is limited to the actual, incurred cost of providing Medicaid services or administrative activities. In those circumstances, a State must use the cost finding and documentation principles that are discussed in 45 C.F.R. Part 75 to determine the amounts that may be reimbursed for Medicaid activities. These costs must be reconciled.