CMS Agrees to Pay Alabama Disputed Funds Under Medicaid Loophole
CMS on Aug. 28 agreed to pay Alabama $54 million in advance Medicaid payments through the end of the fiscal year, the Birmingham News reports. Without the money, Medicaid payments to state doctors, hospitals and nursing homes could have been delayed for up to three weeks. The decision marks a "rare moment of agreement" between state and federal officials and follows "months of tension" over whether Alabama should receive the disputed funds through the Medicaid upper payment limit, commonly known as the Medicaid loophole (Velasco, Birmingham News, 8/29). 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. Although the waiver permitting Alabama to use the loophole expired in April, state 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. The state submitted another request for the funds on Aug. 21 (Kaiser Daily Health Policy Report, 8/23). Alabama Medicaid Commisioner Mike Lewis said that although the payment amount the state will receive is less than what the state originally requested, it is the "correct amount after new calculations," the News reports. Lewis cautioned that CMS could decide at a later date that Alabama received "more money than it was entitled to." Rep. Spencer Bachus (R-Ala.), who last week sent a letter to HHS Secretary Tommy Thompson asking him to help secure the federal funding, said Alabama should use the "breathing room" provided by the payment to finally resolve the dispute over the state's use of the loophole. "(The federal government's) action gives the state of Alabama an opportunity. Hopefully, the state will use this time constructively to fashion a fundamental, long-term solution to our Medicaid troubles," Bachus wrote in a statement (Birmingham News, 8/29). Gov. Don Siegelman (D) added, "I once again encourage the Alabama congressional delegation to get fully engaged in the process of trying to resolve the issues surrounding Alabama's Medicaid plan once and for all" (Reilly, Birmingham News, 8/29).
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