OIG: Alabama Received $88.2M in Unallowable CHIP Bonus Payments

Alabama received $88.2 million in unallowable performance bonus payments under the Children's Health Insurance Program Reauthorization Act of 2009, according to a report from the HHS Office of Inspector General.

Under CHIPRA, qualifying states may receive bonus payments for fiscal years 2009 through 2013 to offset the cost of increased enrollment of children in Medicaid. CMS determines whether states meet the requirements to receive bonus payments, and if they do, the amount of the bonus payment is distributed to them.

In FYs 2009 and 2010, Alabama received bonus payments totaling $39.8 million and $55.6 million, respectively. Ninety-two percent of those payments were not allowable in accordance with federal requirements, according to the OIG, as the state agency overstated its enrollment when requesting bonus payments.

Instead of reporting the monthly average enrollment of qualifying children in CHIP for the current fiscal year, Alabama reported the total number of qualifying children enrolled in the program for each fiscal year. Alabama's enrollment figures for FYs 2009 and 2010 were overstated by 92,370 lives and 92,231 lives, respectively.

The overstated enrollment numbers caused CMS to calculate bonus payments for FYs 2009 and 2010 that were considerably more than allowable, according to the OIG. Based on the numbers Alabama reported, CMS determined the state qualified not only for a "Tier 1" bonus but also for a "Tier 2" bonus under the bonus payment calculation methodology. Qualifying for the "Tier 2" bonus magnified the effect of the state agency's enrollment overstatement.

The OIG calculated that Alabama should have received bonus payments of $1.5 million and $5.7 million for FYs 2009 and 2010, respectively.

The OIG recommended Alabama refund the $88.2 million to the federal government and ensure future requests for bonus payments are calculated using the proper monthly average enrollment figures.

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