California to refund more than $52 million to federal government for immigrant medical care

California must repay nearly $53 million to the federal government after a federal audit revealed that the state improperly claimed Medicaid reimbursements for noncitizens. The Office of the Inspector General at the U.S. Department of Health and Human Services conducted the audit, which found that California had incorrectly calculated and claimed reimbursements for medical care provided to illegal immigrants and other noncitizens.

The core of the problem lies in how California officials calculated federal reimbursements for noncitizen medical care.

The federal government generally prohibits states from claiming Medicaid reimbursements for treating noncitizens who do not meet specific federal requirements, with exceptions for emergency medical situations. This prohibited category includes individuals with "unsatisfactory immigration status," excluding those granted asylum, refugees, or legal permanent residents.

States can, however, expand their Medicaid programs to cover other noncitizens, provided this coverage is fully state-funded. California's Medi-Cal program does just that, offering coverage to illegal immigrants.

California used a formula to determine how much its Medi-Cal program spent on "nonemergency services" for illegal immigrants and other noncitizens not covered by the federal government, and then subtracted it from the total spent on emergency care — ultimately calculating a price tag that was reimbursed under Medicaid, according to the report.

Federal auditors found that this calculation method was outdated and inaccurate, revealing that California improperly claimed $52.7 million out of nearly $373 million in Medicaid reimbursements for noncitizens who did not meet federal requirements, between October 2018 and June 2019.

The audit recommended that California refund the improperly claimed amount and work with federal regulators to identify any additional funds that may have been incorrectly claimed in other years not covered by the audit.

This finding comes at a challenging time for California, as Governor Gavin Newsom recently announced spending reductions to address a nearly $45 billion state deficit.

In response to the audit, the California Department of Health Care Services (DHCS) acknowledged the findings:

"The Department of Health Care Services does not contest the findings of the report by the Office of Inspector General and plans to repay the federal government in full by June 30, 2024."