OIG conducted a series of audits related to States’ withdrawals of Federal Medicaid funds and issued three final reports to the Alabama, Illinois, and Maryland State Medicaid agencies. In the course of these audits, OIG identified systemic issues with the way the States make Federal Medicaid withdrawals that should be communicated to the Centers for Medicare & Medicaid Services (CMS).
CMS has not issued guidance instructing States on the appropriate extent and timing of Medicaid withdrawals. All three States that OIG audited withdrew more funds than necessary to meet immediate cash needs. At the time of OIG’s reviews, Alabama and Maryland had overdrawn more than $130 million in Medicaid funds that they had not refunded to the Federal Government. Although Illinois refunded overdrawn Medicaid funds, its withdrawals exceeded its expenditures by an average of $60 million a quarter.