Opportunities for Program Improvements Related to States' Withdrawals of Federal Medicaid Funds 

The Centers for Medicare & Medicaid Services (CMS) has not issued guidance instructing States on the appropriate extent and timing of Medicaid withdrawals. Specifically, CMS has not issued guidance that clarifies the "as needed" language in 42 CFR § 430.30(d)(3) that would educate States on the application of 31 CFR part 205 in Medicaid. Such guidance and education would help prevent States from withdrawing more Medicaid funds than necessary. All three States that we audited withdrew more funds than necessary to meet immediate cash needs. At the time of our reviews, Alabama and Maryland had overdrawn more than $130 million in Medicaid funds that they had not refunded to the Federal Government. Although Illinois refunded overdrawn Medicaid funds, its withdrawals exceeded its expenditures by an average of $60 million a quarter.