The CMS may cut Alabama's Medicaid funding after learning state officials reject people eligible for Medicaid coverage if they are found to have engaged in fraud or abuse but were never convicted of any criminal act. The CMS said Alabama officials also had a practice of recouping funds from these individuals.
Alabama has said it is simply trying to take action against those who lie on their applications about having been previously accused of criminal activity.
“The CMS supports state efforts to appropriately address fraud and abuse, and federal law and regulations provide mechanisms to do so,” the agency said in a notice posted Thursday. But the correct next step when dealing with applicants believed to have provided false information is to refer the case to law enforcement to investigate fraud, the notice stated.
The notice gives Alabama state officials 30 days to request a hearing.
The CMS can reduce Alabama's administrative Medicaid budget by 1% starting the next fiscal quarter if the issues aren't resolved. The amount will increase by 1% every quarter during which the state remains out of compliance. In fiscal 2015, the state's administrative Medicaid budget was $231 million.
Losing any federal funding could be devastating to Alabama.The state's budget crisis has already led to longer waits for care for Medicaid beneficiaries.
Alabama has just under 900,000 people enrolled in its Medicaid program as of November 2016, according to the CMS. The agency did not say how many eligible people have been rejected by the program.
If the state shows that it has taken corrective actions to comply with federal law, the hearing and the penalties may be postponed, according to a letter sent to state officials.
The CMS first became aware of the practice in February 2016 and has been working with state officials since then. However, the state has not addressed the issue, the CMS said.
A spokeswoman for Alabama's Medicaid agency did not return a request for comment.