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Agreement keeps Medicaid agency from having to repay $1 billion

Compliance Monitor, February 23, 2005

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The Alabama Medicaid Agency settled a 15-year feud with the federal government last week and avoided having to repay $1 billion regulators previously claimed the state owed, The Birmingham News reported February 19.

The dispute was resolved by a joint agreement in which Alabama Medicaid officials agreed to change some accounting practices--which the federal government alleged for the past 15 years were helping the state draw more matching funds. In exchange for its agreement to change its practices, the state Medicaid agency is off the hook for money it was alleged to owe CMS, The Birmingham News reported.

"I am thrilled . . . to be able to work through these issues," state Medicaid Commissioner Carol Hermann told The Birmingham News. "We gave some. They gave some. It allows us to continue to provide the services to the Medicaid recipients."

One of the main areas of dispute, according to the News, is the state's intergovernmental transfer program, which borrows money from public healthcare programs, allowing it to qualify for more federal matching funds. Under the terms of the agreement, Alabama will be allowed to continue this practice until September 30. Then it will need to "tweak" its practices to comply with CMS' requirements.

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