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By Mae Slater on
 June 10, 2024

California Ordered To Pay $53M For Wrong Reimbursements

California owes the federal government $52.7 million for improperly requesting Medicaid reimbursements for services provided to noncitizens.

Bakersfield Now reported that California has acknowledged the audit findings and plans to repay the amount by June 30, while also implementing new methodologies to prevent future issues.

The improper reimbursements were claimed for services provided to "noncitizens with unsatisfactory immigration status." This category, crucially, did not include asylum seekers or refugees.

States are only permitted to claim these types of federal reimbursements for medical emergencies. In this case, the services were not classified as emergencies, making the claims invalid.

Audit Findings Trigger Repayment Obligation

The audit that revealed these discrepancies covered October 2018 to June 2019. The U.S. Department of Health and Human Services inspector general’s office conducted the audit, identifying that California used an outdated calculation method.

This outdated method did not account for services provided to noncitizens, leading to the erroneous claims. Upon the audit's conclusion, auditors recommended that California not only refund the $52.7 million but also collaborate with the Centers for Medicare & Medicaid Services (CMS) for further determinations.

A spokesperson for the California Department of Health Care Services confirmed the state's agreement with the audit's results. The state will repay the federal government in full by June 30.

The spokesperson further elaborated that DHCS is actively working with CMS to refine their service identification methodology. These changes include updated payment and claiming processes to prevent similar issues in the future.

California is already grappling with a significant fiscal challenge, facing a $27.6 billion budget deficit. The obligation to repay $52.7 million compounds this deficit.

Several other states, including Maryland, Minnesota, and Massachusetts, are also encountering significant budget shortfalls. This context highlights the broader challenges states face in managing budget mismatches.

Recommendations From Auditors

Auditors explicitly recommended that California refund the improperly claimed federal reimbursement and collaborate with CMS for an agreed-upon period not covered by the audit. This collaboration aims to determine if there are any additional improper claims that need addressing.

Though California does not contest the findings, the state's acceptance suggests an acknowledgment of the oversight in their reimbursement processes.

The audit focused on a specific period, but the implications are far-reaching. Medicaid reimbursements must strictly adhere to federal guidelines, ensuring that all claims are for eligible services.

California's outdated calculation method highlights the importance of continuously updating processes to comply with federal standards. The refined service identification methodology is a step in this direction.

The state's commitment to repay by June 30 is coupled with ongoing efforts to correct the methodologies used in determining reimbursable services. The collaboration with CMS aims to create a more precise and updated system.

This case underscores the necessity for states to regularly review and update their reimbursement processes to avoid financial discrepancies.


California's obligation to repay the $52.7 million emphasizes the importance of maintaining accurate and compliant Medicaid reimbursement practices. The state is taking corrective actions by working with CMS and updating its methodologies.

By acknowledging the audit findings and committing to repayments, California aims to prevent future issues and ensure compliance with federal regulations. The state's fiscal challenges, including the significant budget deficit, underscore the urgency of these measures.

In summary, California is set to repay $52.7 million to the federal government for improperly claimed Medicaid reimbursements for services provided to noncitizens. The state has recognized the audit's findings and is working to refine its processes to prevent future discrepancies. This obligation comes amid a $27.6 billion budget deficit, highlighting the broader financial pressures faced by the state. Other states are also encountering similar budget shortfalls, illustrating a widespread issue in managing public funds.

Written By:
Mae Slater

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