Internal Review Identifies Additional Federal Match Owed to State For Developmental Disability Services Provided

Following a comprehensive internal review of federal revenue reimbursements in the State's Medicaid related programs, the Department of Healthcare and Family Services (HFS) and the Illinois Department of Human Services (IDHS) identified a computer programming error that led to incomplete federal Medicaid match claims. While this delayed the receipt of a portion of federal funding match, the state is now pursuing this additional one-time federal reimbursement that is within the allowable federal funding window. There was no delay in payment to organizations providing services to individuals and this federal reimbursement delay did not postpone any implementation of developmental disability services.

After a multi-agency internal review of federal funding sources, the agencies impacted determined that a technical coding error delayed communication between IDHS and HFS to submit claims for federal Medicaid reimbursement for community-based services for people with developmental disabilities. Submission files to HFS for payments for service dates between the end of 2020 and June 2022, totaling $601 million in federal match, were impacted by the programming errors, or less than 2% of what HFS drew in federal revenues during that time period. Internal checks on the multi-agency process were missed during this period due to increased Medicaid spending and enhanced federal match rates that masked the delayed reimbursement.

The programming error has been corrected and IDHS has transferred the completed files to HFS so that HFS can submit outstanding claims to the federal government for reimbursement. The vast majority of the spending is still claimable and HFS will seek a federal waiver to process claims for a smaller number of older bills impacted. An additional $250-$300 million in federal claiming was delayed for the period in FY23 prior to when the programming fix was implemented. These amounts will also be claimed in FY24, though it is not unusual for federal claiming to include expenses from the prior fiscal year.

fter studying the issue to gauge the scope of the bills impacted, IDHS and HFS alerted their external auditors to the delayed reimbursement found by the internal review as part of their annual financial audit process.