The state owes the federal government more than $541,000 for improperly reporting how much it paid for birth control drugs under the Medicaid program.
According to a federal audit of the Medicaid family planning program, the state underreported how much it had received in drug company rebates. The federal government pays most of the state's Medicaid costs, and because the rebates were reported inaccurately, the federal government paid too much.
The state Department of Health and Human Services acknowledged that it made mistakes. In a December letter, DHHS secretary Lanier Cansler agreed to the repayment and said the problem uncovered in the audit would be fixed.
The state won't actually send the federal government money, according to DHHS. Rather, the federal Medicaid money the state receives will be reduced to pay the debt.
The state will end up spending about $2.3 billion on Medicaid this year. The federal government will pick up the other $9.5 billion.
Losing money is unwelcome news, especially with the state in a financial crisis. The state is looking at a potential $3.7 billion budget hole, Cabinet agencies have a hiring freeze on "non-critical" positions, and agencies can't spend all the money in their budgets.
Legislators will talk to DHHS about the problem, said state Rep. Nelson Dollar, co-chairman of the House committee that will help write the human services budget.
"We have to do everything we can to ensure that we are not incurring penalties such that we have to refund much needed federal funds."
It's never good news when the state has to give money back, said Rep. Jeff Barnhart, a co-chairman of the House budget-writing committee.
"The good news is it's not $50 million or $500 million," he said. "I'd be more concerned about it."
Wrong numbers
The federal audit found problems in reports that looked at three months of spending in 2004 and three months in 2007. The state failed to report about $300 in interest in 2004 and about $541,000 in rebates in 2007.
The state put the wrong numbers on a reporting form, the federal audit letter said.
The state Medicaid office will change the way it keeps track of its family planning drug reimbursements in April, Cansler told the federal auditor.
