Alabama Improperly Claimed Federal Funds for Children's Health Insurance Program Enrollees Who Had Medicaid or Other Health Insurance Coverage

Alabama improperly claimed Children's Health Insurance Program (CHIP) Federal financial participation (FFP) for some individuals who were concurrently enrolled in CHIP and Medicaid. The Federal and State Governments jointly fund and administer both Medicaid and CHIP. States may not claim CHIP FFP for individuals who are concurrently enrolled in CHIP and Medicaid or who have other health insurance coverage.

Based on our sample results, we estimated that Alabama improperly claimed $1.5 million in CHIP FFP for enrollees who were concurrently enrolled in CHIP and Medicaid from October 1, 2009, through September 30, 2010. Alabama also improperly claimed $153,000 in CHIP FFP for individuals who had other health insurance coverage from October 1, 2009, through September 30, 2010.

The concurrent enrollment in CHIP and Medicaid occurred because (1) Medicaid enrollment could be retroactive for up to 3 months, during which the individual could also have been enrolled in CHIP and (2) Supplemental Security Income eligibility, and consequent Medicaid enrollment, could be retroactive to the original application date, a period during which the individual could also have been enrolled in CHIP. Moreover, the State agency did not have adequate internal controls to prevent or promptly correct concurrent enrollments. The CHIP payments that Alabama claimed on behalf of individuals who had other health insurance coverage occurred because State policy allowed for a coordination of benefits between CHIP and other health insurance coverage.

We recommend that Alabama (1) refund $1.5 million (Federal share) for FFP claimed on behalf of individuals who were concurrently enrolled in CHIP and Medicaid, (2) refund $153,000 (Federal share) for FFP claimed on behalf of individuals enrolled in CHIP who had other health insurance coverage, (3) develop additional policies and procedures to prevent or promptly recoup CHIP payments made on behalf of individuals who are identified as enrolled concurrently in Medicaid, and (4) revise the current policy that allows for a coordination of benefits between CHIP and other health insurance coverage. Alabama disagreed with all of our recommendations.