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DHHS to repay federal Medicaid funds

Release Date: July 24, 2009
Contact: Renee McCoy, 919-733-9190

RALEIGH – Department of Health and Human Services (DHHS) Secretary Lanier Cansler met Wednesday with the Centers for Medicare and Medicaid Services (CMS) to notify the federal agency of accounting and billing errors that have resulted in the department overdrawing approximately $300 million in federal Medicaid funds. At the meeting, the Secretary and CMS agreed upon a repayment plan that will enable DHHS to repay the funds.

The Department will return approximately $200 million of the overdrawn funds by July 31, and has received approval from CMS to repay the balance over the course of the fiscal year. DHHS received more than $7.5 billion this past year from CMS to assist in the funding of the state’s Medicaid program.

Medicaid funds began to be overdrawn in early November 2008, when accounting changes were made to a database to reflect the federal Medicaid matching rate changes for North Carolina. Public hospital payments were incorrectly charged to a federal account instead of a state account, which resulted in federal  funds being overdrawn.

“This mistake should not have been made. Originating almost eight months ago, it should have been identified and reported earlier. I have discussed the matter with the Governor, and I am aggressively working to strengthen the internal controls and will take whatever other remedial actions may be necessary,” said Sec. Cansler. “The safeguards that were in place to prevent this type of error were inadequate. There were breakdowns in communication and oversight, and corrective actions will be taken quickly.”

The error was reported to the Secretary on July 15. It did not and will not affect assistance to Medicaid recipients.



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