Review of the Centers for Medicare & Medicaid Services Grant Closeout Procedures

We found that the 197 grants that the Department's Division of Payment Management (DPM) had identified as eligible for closeout as of March 31, 2006, remained open in the Payment Management System for several reasons.  DPM is responsible for recording grant activity in the payment system and closing grants after receiving closeout instructions from CMS's Office of Financial Management.  CMS's program offices, the Center for Medicaid & State Operations and the Office of Acquisition and Grants Management, are responsible for initiating closeout of grants.  As a general rule, grants must be closed within 180 days after the end of the grant period (the cutoff date).

For 33 grants with unexpended balances totaling $1.2 billion, the program offices did not initiate closeout because they were awaiting the results of legislative proposals to use the expired funds for other purposes or because they lacked an adequate monitoring system to ensure that grants were closed by the cutoff date.  For 164 grants with unexpended balances totaling $104.2 million, the program offices did initiate closeout.  However, DPM did not complete closeout primarily because of differences (sometimes of $1 or less) among the grant award, expenditure, and drawdown amounts in the payment system.

We recommended that CMS (1) ensure that the program offices close grants by the cutoff date by establishing an adequate monitoring system, (2) deobligate any unexpended balances on grants open past the cutoff date, and (3) work with DPM to establish a dollar threshold for differences in payment system balances and procedures for closing grants with differences below the threshold.  CMS generally concurred with our recommendations.