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Transcript for audio podcast: Review of Maryland's Federal Medicaid Withdrawals

From the Office of Inspector General of Department of Health and Human Services

[Warren Lundy] I'm Warren Lundy, an audit manager in Oklahoma City, speaking with Miquel Darcey, a senior auditor in our Oklahoma City office. Miquel, your audit team conducted a review of Maryland's Federal Medicaid withdrawals. Tell us about your review.

[Miquel Darcey] Sure. First, I'd like to provide a little background on the Medicaid funding process. Federal and State Governments jointly fund the Medicaid program. Each quarter, the States estimate the amount of money they need from the Federal Government. After estimates are approved by the Federal Government, the money is made available to the States in accounts similar to bank accounts. Throughout the quarter, the States withdraw Federal funds from the accounts to pay the Federal portion of Medicaid expenses.

[Warren Lundy] Explain how Federal and State Governments account for the money spent on Medicaid programs and services.

[Miquel Darcey] Well, after the end of each quarter, a State reports its actual Medicaid expenditures. The Federal Government either decreases or increases the money in the State's accounts to compensate for the State's actual costs.

[Warren Lundy] Good background information. Now, what led to this review of Maryland's Federal Medicaid withdrawals?

[Miquel Darcey] We reviewed Maryland because, according to a 2011 audit, State Medicaid programs owed $1.3 billion dollars to the Federal Government, and Maryland owed more money than most states. Our review was designed to see if Maryland truly owed the Federal Government money.

[Warren Lundy] Tell us about what your Maryland audit found.

[Miquel Darcey] Maryland had its own quarterly reconciliation process where it compared its Medicaid expenses to the money it withdrew each quarter. We created our own comparison of the amount of money that Maryland withdrew compared to its Medicaid expenditures each quarter from 2009 through 2011. We also reviewed the reconciliation that Maryland prepared each quarter.

[Warren Lundy] What did you find over that 3 year period?

[Miquel Darcey] Maryland withdrew nearly $13 more than $12 billion dollars, but $115 million of the withdrawals were not supported by Medicaid expenses. That means the State withdrew more Federal money than it was entitled to. Maryland made errors during its quarterly reconciliation - which resulted in most of thethose unsupported withdrawals .

[Warren Lundy] What types of reconciliation errors did Maryland make?

[Miquel Darcey] The most consistent type of error was not accurately paying back or obtaining additional Federal money based on its own reconciliations, and . So that means Maryland obtained about $73 million dollars more than it needed - to cover its Medicaid expenses.

[Warren Lundy] What other types of errors did Maryland make?

[Miquel Darcey] They made various errors that accounted for the rest of the $115 million dollars. For example, in one quarterly reconciliation, Maryland incorrectly included $36 million dollars as Medicaid expenses that they shouldn't have. They actually spent that money for a non-Medicaid program. So the reconciliation was incorrect and Maryland did not return enough money to the Federal government for that quarter.

[Warren Lundy] So was Maryland's only mistake taking more money from the Federal account than it needed?

[Miquel Darcey] No. Maryland made several errors resulting in the state not getting enough Federal money. The $115 million is the net total of extra Federal dollars that Maryland drew down without support.

[Warren Lundy] What actions should Maryland take to address the results of this review?

[Miquel Darcey] We recommended that Maryland refund the $115 million dollars to the Federal Government. We also made several recommendations to improve Maryland's reconciliation process.

[Warren Lundy] How did Maryland respond to those recommendations?

[Miquel Darcey] Maryland agreed with our recommendations and stated that it already refunded most of the $115 million dollars and has taken steps to improve its reconciliation procedures.

[Warren Lundy] Does OIG think other States could be getting more Federal funding than they need for Medicaid expenses?

[Miquel Darcey] That's possible. Our review of Maryland's Federal withdrawals was just the first in a series of such reviews. We're currently doing similar reviews in several other States. We should be issuing those reports in 2014.

[Warren Lundy] Thanks, Miquel, for sharing this audit work with us today.


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