North Carolina Received Millions in Unallowable Bonus Payments

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.

Most of the bonus payments that North Carolina received for the audit period were not allowable in accordance with Federal requirements. Most of the data used in North Carolina's bonus payment calculations were in accordance with Federal requirements. However, the North Carolina Department of Health and Human Services' Division of Medical Assistance (State agency) overstated its FYs 2011 through 2013 current enrollment in its bonus requests to CMS because it included individuals who did not qualify because of their basis-of-eligibility (BOE) code. As a result, CMS overpaid North Carolina $34.8 million in bonus payments.

We recommended that the State agency refund $34.8 million to the Federal Government. The State agency acknowledged that it inadvertently included individuals with nonqualifying BOE codes in its current enrollment. However, State agency officials disagreed with our recommendation.