Alabama Received Millions in Unallowable Performance Bonus Payments Under the Children's Health Insurance Program Reauthorization Act

Under the Children's Health Insurance Program Reauthorization Act of 2009, Congress appropriated $3.225 billion for qualifying States to receive performance bonus payments (bonus payments) for Federal fiscal years (FYs) 2009 through 2013 to offset the costs of increased enrollment of children in Medicaid.

We found that the majority (92 percent) of bonus payments that Alabama received for FYs 2009 and 2010 was not allowable in accordance with Federal requirements. Although most of the data elements used in the bonus payment calculations were in accordance with Federal requirements, the State agency overstated its FYs 2009 and 2010 current enrollment in its requests for bonus payments. As a result, CMS overpaid Alabama $88.2 million in bonus payments.

We recommended that the State agency (1) refund $88.2 million to the Federal Government and

(2) ensure that future requests for bonus payments are calculated using the monthly average number of qualifying children and not the total number per year of qualifying children in Alabama Medicaid, to comply with Federal requirements. The State agency disagreed with our first recommendation and concurred with our second recommendation.