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Audit (A-06-12-00051)

Maryland Withdrew Excessive Federal Medicaid Funds for Fiscal Years 2009 Through 2011

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The Maryland Department of Health and Mental Hygiene (State agency) obtained Federal Medicaid funds for fiscal years (FYs) 2009 through 2011 that were not supported by net expenditures. The State agency obtained $12.9 billion in Federal Medicaid funds, but CMS awarded the State agency only $12.8 billion for Medicaid expenditures. The State agency inappropriately withdrew the difference of $115.3 million, consisting of $116.7 million that the State agency inappropriately withdrew from FY 2012 grant award funds because of errors that occurred during its quarterly reconciliations for FYs 2009 through 2011 and $1.4 million owed to the State agency because it mistakenly returned more funds than necessary in an FY 2011 account that was originally overdrawn.

Additionally, the State agency did not always withdraw Federal funds from the appropriate Payment Management System (PMS) accounts because of fund deficiencies, a faulty procedure, and other errors. The withdrawals caused the balances in the accounts to be wrong.

We recommended that the State agency (1) refund $115.3 million to the Federal Government,

(2) ensure that the amounts used in its quarterly reconciliations are accurate and that it makes reconciliation adjustments to return or obtain Federal funds, (3) establish procedures in its quarterly reconciliations to account for adjustments to expenditures not included on the CMS-64 report but that affect the State agency's grant award amounts, (4) monitor PMS accounts to anticipate fund deficiencies and determine whether to refund overdrawn amounts or to request a supplemental grant award, and (5) ensure that it withdraws funds from the appropriate PMS account. The State agency concurred with all of our recommendations.

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