CMS Denies Alabama’s Request To Continue Current Use of Medicaid Loophole
CMS officials have declined to grant Alabama permission to continue to use the Medicaid upper payment limit, commonly known as the Medicaid loophole, under the state's current formula, the Associated Press reports (Niesse, Associated Press, 4/30). Under the loophole, the state reimburses public hospitals and nurses for care provided to Medicaid beneficiaries at 150% of the Medicare rate, receives additional federal matching dollars for doing so and then requires the facilities to return the extra reimbursements to the state, which can then use the money for a number of purposes (Kaiser Daily Health Policy Report, 4/17). According to an HHS Office of Inspector General report released one year ago, the Alabama Medicaid Agency in fiscal year 1998 made unauthorized changes to the way it computed the enhanced payments under the loophole (Kaiser Daily Health Policy Report, 5/24/01). CMS officials maintain that the state owes the agency about $548 million for "duplicate payments, improper leveraging of funds and accepting federal overpayments" (Associated Press, 4/30). But Alabama says it uses the loophole correctly and spends all the additional funds it receives on health care (Kaiser Daily Health Policy Report, 4/17). CMS had previously extended in five instances the time Alabama had to address the agency's concerns about improper use of the loophole (Cusack, Inside CMS, 4/30). CMS has said it will stop paying Alabama about $2 million annually in enhanced payments unless the state increases its financial contribution to the Medicaid program, CMS spokesperson Peter Ashkenaz said. While it is unclear how the dispute will affect the state's Medicaid program, Gov. Don Siegelman (D) said that the quality of care for Medicaid beneficiaries will not decline. "Not one single Alabama Medicaid recipient will be affected. Health care for more than 700,000 ... recipients will not be interrupted," he added (Associated Press, 4/30).
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