Even if Alabama lawmakers find the money to fill an $85 million gap in the state’s Medicaid budget this year, that money could vanish in the blink of an eye.

Federal audits of the Alabama Medicaid Agency, released this summer, claim that the state overcharged the federal Department of Health and Human Services by more than $90 million for services delivered years ago. Federal officials could ask for some or all of that money back, creating a new hole in the troubled program’s budget.

At this time, Alabama has not received a demand letter requesting payback and intends to contest this finding vigorously,” Medicaid spokeswoman Robin Rawls wrote in an emailed response to The Anniston Star’s questions about the audits.

Lawmakers are in special session in Montgomery this week, seeking a solution to a looming Medicaid shortfall.

Roughly 1 million Alabamians, most of them children, get their health care through Medicaid, a joint state-and-federal health care program for the poor. The federal government picks up most of the tab for Medicaid, and Alabama has long struggled to pay its share.

Lawmakers earlier this year agreed to give the program $700 million for the 2017 budget year, which begins Oct. 1. Gov. Robert Bentley asked lawmakers for $785 million, and Medicaid officials wanted even more.

Both cited the program’s growing cost and the cost of setting up reforms, approved by lawmakers years ago, that are expected to eventually save money.

Bentley’s budget request led to a series of showdowns in the Legislature. Medicaid officials say they may have to cut services and scuttle reforms if the agency doesn’t get more money. Bentley’s proposal to set up a lottery to pay for Medicaid came within a hair’s breadth of passage last month before the pro-lottery coalition in the Alabama Senate fell apart. Senators on Tuesday debated a bill that would use money from the 2010 BP oil spill to pay down state debt and free money to fill the Medicaid gap.

Another 2010 spill — this one a spill of cash — could wipe out any gains the state would see from the BP bill. In reports released in July and August, auditors from the inspector general’s office at HHS allege the state overcharged the federal government for services from 2010 through 2012.

—   A July audit recommends the state to repay $75 million it claimed by improperly charging federal officials for school-based administrative activities that support Medicaid. According to the report, some state employees were listed more than once on state’s list of school officials dedicated to Medicaid.

—  A separate July report recommended the state repay $21 million it received in 2010 because of calculation errors and requests for federal money to pay for service at privately run hospitals that didn’t qualify for the payments.

—  An August memorandum cited $5 million in payments Alabama claimed on behalf of privately run hospitals. (Rawls, the Medicaid spokeswoman, noted that the memo “did not recommend funds be recouped” from Alabama.)

Attempts to reach Health and Human Services officials for comment on the audits were unsuccessful Tuesday, as were attempts to reach officials in Bentley’s office.

Rawls, via email, said the state disagrees with the auditors’ rulings and plans to work with the Center for Medicaid Services to resolve the issue.

Alabama Medicaid officials were aware of auditors’ concerns as early as November 2015, according to correspondence included with the audits. Medicaid Commissioner Stephanie Azar sent a response to federal auditors, saying the state didn’t believe it owed HHS money, in January, a few weeks before the regular session of the Legislature began.

The auditors’ requests weren’t included in the Medicaid Agency’s budget request for 2017, Rawls said. The agency, she said, has yet to receive a “demand letter” — official acknowledgement from the federal government that it expects to be paid back.

Federal auditors, in their July reports, stuck by their recommendation for repayment.

“The state agency has had those incorrectly claimed funds for more than five years,” the auditors wrote.

Capitol & statewide reporter Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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