Tennessee’s Early-Intervention Claims Were 13% of Audited Spending but 70% of Sampled Errors

The eligibility finding is concentrated, not uniform

Tennessee’s disputed case-management audit is not a finding that its entire child-welfare billing system failed in the same way. Our examination of the federal report’s sampling appendices finds that a comparatively small early-intervention spending stream supplied most of the sampled errors: 13.1% of the audited total dollars, but 69.8% of the 43 grouped claims auditors classified as unallowable.

That stream comprised $66,173,973 in claims associated with Department of Intellectual and Developmental Disabilities providers, out of a $503,468,529 total for federal fiscal years 2021–2023. Auditors selected 30 items from that provider stratum and questioned all 30. The other 13 questioned items came from 120 sampled Department of Children’s Services items. These are shares of a stratified sample, not a new statewide probability estimate.

The accountability question is whether Tennessee had documented eligibility for the particular federal billing category it used—not whether developmental support for young children is valuable. The state contests the audit’s interpretation, and a separate CMS record confirms that a dedicated early-intervention case-management benefit was approved later. Those distinctions are necessary to understand the recommended $59.3 million federal refund.

A smaller claim stream supplies most sampled questioned dollars

Appendix D shows $16,365 in questioned sample payments from the early-intervention provider stratum and $4,589 from the lower-dollar child-welfare stratum. Their $20,954 sum means early intervention accounted for 78.1% of the sample’s questioned total dollars. The federal-share figures—$11,991 and $3,452—produce a similar 77.6% concentration. These sample dollars are not the amount of the statewide refund recommendation.

The remaining higher-dollar child-welfare stratum contained 60 sampled items and no questioned items. That counterevidence rules out saying every reviewed category or every provider failed. It also makes a simple 43-of-150 error fraction a poor substitute for the auditor’s weighted statistical estimate: the sample separately represented different provider and payment-size strata.

The inspector general’s federal-share point estimate was $68,627,948, with a two-sided 90% confidence interval from $59,300,776 to $77,955,119. It recommended recovery at the lower bound, about $9.3 million below the point estimate. Our comparison retains that distinction rather than treating the higher estimate as a settled bill.

A later benefit does not retroactively settle earlier claims

The audit covers October 1, 2020 through September 30, 2023. During that period, Tennessee claimed case-management reimbursement under its Children in State Custody or at Risk of State Custody target group. Auditors said early-intervention developmental screenings did not document the required serious or imminent risk of entering custody.

We separately read CMS’s Tennessee amendment TN-25-0004. The June 25, 2025 approval letter establishes a new targeted case-management benefit for children receiving early-intervention services, effective April 1, 2025—about 18 months after the audited period ended. The approved target group covers Medicaid-eligible children from birth through age five with a demonstrated developmental delay, enrolled in the Tennessee Early Intervention System and receiving services through an active individualized family service plan.

The later amendment is significant counterevidence to any suggestion that early-intervention case management is categorically outside Medicaid. But its express effective date does not by itself establish that the earlier claims met the different target-group rule then used. The amendment also requires case records and states that payment must not duplicate payments under other authorities; approval is not a waiver of all documentation obligations.

Tennessee rejects both recommendations

Tennessee disputed all 43 questioned sampled items and opposed both the refund and a new eligibility-verification step. It argued that child-welfare hotline intake, court involvement and other tools—not merely a later needs-assessment score—could establish eligibility. It said its early-intervention children had been categorically determined to be at risk under an interagency agreement, and that the 2025 approval reinforced the allowability of the services.

The inspector general said it reviewed case notes, hotline materials, court records and other assessments, not just one tool. It maintained that the documents did not establish the required risk for the service months questioned. For the early-intervention items, it said developmental-delay eligibility did not substitute for the target-group determination required during the audit period.

The final report also preserves an important concession: initial triage and assessment services were allowable. Auditors said they did not question case-management billing in the same month as the initial assessment and revised their workflow figure to better reflect the state’s intake process. Describing the audit as banning reimbursement for initial child-welfare screening would therefore be inaccurate.

What this document analysis establishes

What’s the Scoop With Broach compared the full audit’s provider strata, sample-result dollar tables, confidence interval, detailed state objections and auditor responses with the independently published CMS amendment and its effective date. The original contribution is the concentration analysis and the billing-rule timeline: a small historical spending stream drives most sample findings, while a later authorized benefit changes the relevant policy context.

We did not obtain children’s case files, interview families or conduct an independent clinical review. The analysis does not declare any child’s care unnecessary, estimate a current-program error rate, or establish that Tennessee has refunded the recommended amount. As of October 14, 2026, the examined records show an auditor-state disagreement about historical federal claims and a later benefit approval, not a final adjudication of recovery.