The findings, released by the Office of the Inspector General at the U.S. Department of Health and Human Services, come as California has been staring down a $44.9-billion deficit.
However, state officials said the refund had already been accounted for in the California budget plan, which includes a variety of spending reductions. H.D. Palmer, deputy director of external affairs for the California Department of Finance, said it would not trigger additional cuts.
States are generally barred from claiming Medicaid reimbursement for treating immigrants who do not meet federal requirements, with the exception of emergency care. The federal government calls the prohibited group “noncitizens with unsatisfactory immigration status,” a category that does not include immigrants who are refugees, have been granted asylum, or were legally admitted for permanent residence under federal law.
Despite those restrictions, states can expand their Medicaid programs to provide additional services that are fully funded by the states rather than the federal government. California has gradually extended its Medicaid program, called Medi-Cal, to provide coverage for immigrants in the country without legal authorization.
Under its program, it pays managed care plans a fixed amount each month for each Medi-Cal enrollee. California used a formula to determine how much of those payments went to “nonemergency services” for immigrant patients whose care is not covered by the federal government, then subtracted it from the total to calculate how much went to their emergency care, which can be reimbursed under Medicaid.
California said the federal government had given its blessing for that calculation method “sometime in the early 2000s,” but could not provide any records showing it had been approved, according to the report from the Office of the Inspector General.
The federal audit found that out of nearly $373 million in Medicaid reimbursement for immigrants who did not meet the federal requirements, California improperly claimed $52.7 million from October 2018 through June 2019. It faulted the calculation method used by the state, which had not been reassessed for years and did not accurately reflect the share of costs that went to emergency services, according to the investigators.
The Office of the Inspector General recommended that California refund the money and work with federal regulators to determine how much in federal funding might have been improperly claimed in other years that weren’t covered in the audit. A Centers for Medicare & Medicaid Services spokesperson said the federal agency was aware of the report and “we are working with the state of California to address issues the audit raised.”
The California Department of Health Care Services said it did not contest the findings, although the federal audit noted that it was “unable to replicate” the recalculations done by the federal auditors to come up with the refund amount. The state agency said it “plans to repay the federal government in full by June 30.”
The California department also said it was working with the Centers for Medicare & Medicaid Services to develop a “more refined” methodology and “updated payment and claiming processes.”