Survey of HEW and States' Management of Spend-Down Payments for Medically Needy Persons

HRD-77-43: Published: Feb 3, 1977. Publicly Released: Feb 3, 1977.

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Reviews were conducted during 1975 and 1976 of systems for managing spend-down payments for the medically needy in New York, Maryland, California, the District of Columbia, and as a followup, in Illinois. Spend-down payments, provided by some States under Medicaid for those with incomes above a State-prescribed level but with greater medical expenses, are not eligible for Federal financial participation.

New York and Illinois have been paying for and improperly claiming Federal assistance for spend-down amounts although procedures existed for collecting these amounts from the medically needy. Improper Federal financial assistance to New York State for expenses at municipal hospitals was estimated at $3 million for a 12-month period. Illinois concurred with a 1975 HEW Audit Agency report on its Medicaid program, but did not meet the report's recommendations and did not plan corrective action until a new Medicaid Management Information System would be operational. Limited reviews at the other locations did not disclose billings for ineligible costs.

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