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Federal audit alleges Alabama owes DHS $100M+ for Medicaid mismanagement

Governor Robert Bentley takes questions from reporters. (Photo: Governor's Office, Jamie Martin)
Governor Robert Bentley takes questions from reporters. (Photo: Governor’s Office, Jamie Martin)

MONTGOMERY, Ala. — Federal audits of Alabama’s Medicaid Agency assert the state overcharged the U.S. Dept. of Health and Human Services (DHS) to the tune of roughly $100 million and must repay the funds, a revelation that some state government officials believe threatens to plunge the state’s already-strained Medicaid Agency into deeper financial straits.

The Bentley administration contests some of the findings in the Federal audit reports, but Gov. Robert Bentley concedes the state will at some point have to repay a large sum of money to DHS.

“We have owed money back to Medicaid since 2004, 2005,” Gov. Bentley told reporters. “It may be as much as $150 million or $200 million that we owe. And yes, we are going to have to pay it back.”

The governor said he plans to negotiate with the Feds in an effort to reduce the total amount owed.

“Part of the money we’re going to have to pay back, we’re not going to have any choice,” he concluded.

Alabama’s Medicaid funding shortfall, roughly $85 million in the coming Fiscal Year, was the primary reason the governor called lawmakers into a Special Legislative Session. After failing to pass a lottery proposal, the legislature turned to BP Oil Spill settlement money as a last resort, sparking a fierce debate over diverting the money away from coastal communities that were hardest hit by the oil spill.

Earlier this week, legislators passed a compromise plan to use the BP money to pay down $400 million in debt, send $120 million to Medicaid to cover the agency’s budget shortfall, and funnel $120 million to south Alabama to fund road projects in areas hardest hit by the BP Oil Spill.

But State Auditor Jim Zeigler, a frequent Bentley critic and south Alabama resident, warned his coastal area constituents that the latest revelations about Medicaid’s mistakes could threaten to derail the road projects before they even get started.

“I found out about this on the final day of the Special Session,” said Zeigler, whose office is not tasked with auditing the Medicaid program. “$101 million of the $120 million that should have come to Baldwin and Mobile County is going to go to Washington to repay the Feds for accounting irregularities and mistakes made in the past five years of the Bentley administration. So our BP Oil Spill money is going to Washington to make up for mistakes.”

A spokesperson for Gov. Bentley told Yellowhammer Friday morning that Mr. Zeigler’s assertion is not true.

“This is a payment that will likely come in the future,” said Bentley communications director Yasamie August. “But it will not impact the BP money.”

August also reiterated Gov. Bentley’s comment that the state will negotiate with the federal government over certain points in the audit and that whatever repayment the state has to make will not happen in the near term.

“The Centers for Medicare & Medicaid Services has not yet requested payment from the state,” she said. “The state Medicaid Agency will have an opportunity to negotiate and dispute some of the findings.”

A spokesperson for the State Medicaid Agency told the Anniston Star “vigorously” contest the Federal audit’s findings.

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