Alabama Did Not Comply With Federal and State Requirements for Claiming Medicaid Certified Public Expenditures for Federal Fiscal Year 2010

The Alabama Medicaid Agency (State agency) did not comply with Federal and State requirements for claiming $209.5 million ($162.5 million Federal share) in certified public expenditures (CPEs) for Federal fiscal year 2010. The State agency incorrectly claimed $27.5 million ($21.3 million Federal share) because it made errors in its CPE calculation.

We are setting aside the remaining $182 million ($141.2 million Federal share) the State agency claimed because it did not calculate the CPEs in accordance with the CMS-approved State plan. Of that amount, $55.3 million ($42.8 million Federal share) resulted from the State agency inappropriately applying a market inflation factor to 2010 costs, which essentially increased those costs to 2013 levels.

We recommended that the State agency (1) refund to the Federal Government the $21.3 million that related to the errors the State agency made when calculating CPEs and (2) work with CMS to determine whether any portion of the $141.2 million related to CPEs that were not calculated in accordance with the State plan should be refunded to the Federal Government, particularly the $42.8 million Federal share associated with the increase from the application of the market inflation factor. The State agency did not concur with our first recommendation and partially concurred with our second recommendation.