Alabama Submitts Another Request to CMS to Receive Disputed Funds Under Medicaid Loophole

Rep. Spencer Bachus (R-Ala.) on Aug. 21 sent a letter to HHS Secretary Tommy Thompson asking him to "personally intervene" in a dispute between CMS and state officials over an advance payment of $60.8 million in disputed Medicaid funds, the Mobile Register reports. If CMS does not agree to release the money, Alabama will not be able to pay hospitals, nursing homes, pharmacies and "other providers" for Medicaid services, which are used by 700,000 state residents, the letter states. "We won't be able to pay for tens of millions of dollars (in) health care next month. I consider that catastrophic," Bachus said (Owen, Mobile Register, 8/22). The payment is part of a "long-running funding dispute" between state and federal officials over whether Alabama should receive money through the Medicaid upper payment limit, commonly known as the Medicaid loophole (Orndorff, Birmingham News, 8/22). Under the loophole, states pay local hospitals more than the actual cost of health services, receive inflated reimbursements from the federal government and require the hospitals to return the extra money to the state, which can use the funds for health- and nonhealth-related expenses (Mobile Register, 8/22). Although the waiver permitting Alabama to use the loophole expired in April, Medicaid officials asked CMS to give the state more than $125 million in advance Medicaid payments to cover expenses for the remainder of the current fiscal year. CMS approved $66 million in costs, but denied $60.8 million (Birmingham News, 8/22). The state submitted another request for the funds on Aug. 21, Alabama Medicaid Commissioner Mike Lewis said. Although Bachus' letter says that the state will be unable to pay providers for seven weeks without the additional funds, Lewis said that even if the state does not receive the funds, it still will be able to make 70% of the payments and none of them would be more than 22 days late (Mobile Register, 8/22). Mike Kanarick, a spokesperson for Gov. Don Siegelman (D), said, "If federal bureaucrats deny or continue to block Alabama's previously approved plan, the governor is prepared to take the necessary action, including filing a lawsuit, to protect the citizens" (Birmingham News, 8/22).