Sneak Preview: CMS To Clarify Medicaid Withdrawal Requirements

June 3, 2016 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from a recent article in the Single Audit Information Service.) The Department of Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS) is developing guidance to better clarify its requirement that states should withdraw federal Medicaid funds “as needed,” in response to a recent audit by the HHS Office of Inspector General (OIG).

Since Fiscal Year (FY) 2010, states haves established annualized accounts in the HHS Payment Management System (PMS) to pay for Medicaid expenditures. CMS provides Medicaid funding to these accounts based on each state’s Medicaid expenditure estimates. States have a PMS account for each FY, rather than having accounts that combine funds for multiple FYs. States should return funds to or withdraw funds from appropriate PMS accounts established for each FY in which the associated expenditures were reported.

Federal regulations in Title 42, Part 430 of the Code of Federal Regulations (C.F.R.) authorize states to withdraw federal Medicaid funds “as needed” to pay the federal share of Medicaid disbursements (42 C.F.R. §430.30(d)(3)). In addition, under Department of the Treasury requirements, states are required to minimize the time elapsing between when they transfer of funds from the Treasury and disburse them, and limit the transfer to the amount needed to meet their actual and immediate cash needs (31 C.F.R. Part 205). However, Treasury, not CMS, is responsible for enforcing the regulation at 31 C.F.R. Part 205.

After evaluating CMS’s oversight of the withdrawal of Medicaid funds by the states of Alabama, Illinois and Maryland, the OIG found that CMS lacked guidance that clarifies the “as needed” language in its Medicaid regulations to enable states to better understand the extent of drawing down funds. “Such guidance and education would help prevent states from withdrawing more Medicaid funds than necessary,” the OIG said.

After reviewing the states’ withdrawals from FYs 2009 through 2012, the OIG found that all three states withdrew more funds than necessary to meet their immediate cash needs. Alabama and Maryland had overdrawn more than $130 million in Medicaid funds that they had not returned to the federal government. Although Illinois refunded its overdrawn Medicaid funds, its withdrawals exceeded its expenditures by an average of $60 million each quarter.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)


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