CMS Withholds $14.7M in Alabama Medicaid Funding Over Billing Dispute

The Center for Medicaid and Medicare Services (formerly HCFA) on July 1 withheld $14.7 million out of a $500 million quarterly Medicaid payment to Alabama because the state has not changed what the agency says is an improper payment system for public hospitals, the Birmingham News reports. A May audit conducted by the HHS Inspector General's office concluded that Alabama "made two unauthorized calculation changes in fiscal [year] 1998 that resulted in $237 million in overpayments" by CMS through last year. Alabama Medicaid officials have said their accounting methods are proper and last week requested that the federal government resume full payments. The "decision to take such a drastic action without the benefit of Alabama's response is nothing less than confounding," Medicaid Commissioner Mike Lewis wrote to CMS. Although no state services have been cut as a result of the withholding, Lewis said that if Alabama has to repay the $237 million in full, its Medicaid program could be in "serious trouble." The state can appeal CMS's decision or take the agency to court over the withholding, the News reports. CMS Administrator Thomas Scully said that the agency is not "going to back off" the dispute. Alabama has "a Medicaid program that has been extremely creative. It's also been extremely abusive of federal rules," Scully added (Velasco, Birmingham News, 7/6). The original Inspector General report is available online.