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 said it is simply trying to take action against those who lie on their applications. But the CMS says the correct next step when dealing with questionable applications 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 the state remains non-compliant. In fiscal 2015, the state's Medicaid administrative budget was $231 million.