Alabama Withdrew Excessive Federal Medicaid Funds for Fiscal Years 2010 Through 2012

The Alabama Medicaid Agency (State agency) obtained Federal Medicaid funds for FYs 2010 through 2012 that were not supported by net expenditures. The State agency obtained $10.98 billion in Federal Medicaid funds, but CMS awarded the State agency only $10.96 billion for Medicaid expenditures.

Of the $18.9 million difference, the State agency withdrew $14.8 million that exceeded net Medicaid expenditures for FYs 2010 through 2012. These inappropriate Medicaid withdrawals occurred because the State agency miscalculated and overstated the Federal share of expenditures in its cashbook, paid for overdrawn balances in previous years' PMS accounts, and withdrew funds for expenditures of another federally funded program.

The State agency inappropriately withdrew the remaining $4.1 million from FY 2012 funds to pay for FY 2013 Medicaid expenditures. We are setting these Medicaid funds aside because (1) we did not review the State agency's withdrawals from FY 2013 Medicaid Payment Management System (PMS) accounts and (2) CMS had not finalized the Federal funds for FY 2013 at the time of our review.

We recommended that the State agency (1) refund $14.8 million to the Federal Government; (2) work with CMS to determine whether the $4.1 million withdrawn for FY 2013 Medicaid expenditures should be refunded to the Federal Government and ensure that funds are withdrawn from the appropriate PMS account; (3) establish procedures to compare withdrawn Federal funds with actual net Medicaid expenditures; (4) review CMS's calculations of final grant awards for accuracy; (5) investigate reasons for account balances, particularly if CMS has not finalized the funds and the funds are to be used to pay for overdrawn balances in other PMS accounts; and (6) separate Medicaid expenditures from other federally funded program expenditures when calculating Medicaid withdrawals. The State agency did not concur with our first recommendation and described actions that it has taken to address the final five recommendations.