The federal Department of Health and Human Services has balked at repaying $4.3 billion erroneously paid in a Medicaid mix-up involving 280,000 beneficiaries.
The problem was caused by a Social Security Administration error that classified some disabled enrollees as eligible for Supplemental Security Income when they should have been classified as eligible for Social Security Disability Insurance. Then, states used Medicaid funds to pay for care that Medicare should have provided. The mistake was discovered in 1999 and goes back to the 1970s.
Earlier this year, the National Association of Medicaid Directors asked HHS Secretary Kathleen Sebelius to resolve the issue through the department's Medicare and Medicaid demonstration program. The organization wanted her to issue credits that states could use for their Medicaid fund match. However, last week Sebelius said she lacked "the statutory authority to use my demonstration authorities to this end." States will likely need congressional action to get the issue resolved, she said.
Many states were counting on the repayment since spending for the Medicaid program is expected to rise by a record 29 percent in fiscal year 2012, according to the Kaiser Family Foundation.
Shares of misallocated funds range from $3.5 million for Wyoming to $821.2 million for California, according to the University of Massachusetts Medical Schools Center for Health Care Financing.