Illinois fights HHS over audit reporting that state owes $140 million

State fights HHS’ efforts to collect $140 million

Illinois state officials, who are already grappling with one of the nation’s most severe fiscal crises, plan to continue fighting the federal government’s efforts to squeeze the state Medicaid program for $140 million.

The eye-popping figure was first revealed in an HHS audit in 2004, when auditors reported that the state had allowed a Chicago hospital to collect a quarter of a billion dollars too much in disproportionate-share Medicaid revenue during the last few years of the 1990s.

It was the largest overpayment auditors uncovered among nearly 150 similar reviews by HHS’ inspector general’s office during the 2000s. And it remains unpaid today, despite a federal law that requires the CMS to take swift action to collect the debt.

Last week, HHS auditors prodded CMS officials again to either collect the $140 million from Illinois or submit paperwork explaining why they think the audit was flawed. The Feb. 20 audit said the CMS had not been “aggressive” enough in collecting Medicaid debts in 10 of the 147 audits it reviewed from the past decade, leaving $226 million in unrecouped revenue.

“Illinois strongly disagrees with the contention that money should be refunded to the federal government and will continue to vigorously contest this matter,” Medicaid spokeswoman Kelly Jakubek said in an e-mail.

HHS wrote in its 2004 audit that the hospital—then known as the University of Illinois at Chicago Hospital—had overreported the cost of free and discounted care provided to uninsured and Medicaid patients between 1997 and 2000. Those figures were used to give extra