Highlight on California: The Golden State failed to verify aliens’ Medicaid eligibility

California obtained $9.9 million in improper Medicaid reimbursement over a five-year period by failing to correctly identify all nonreimbursable claims for nonemergency services provided to qualified aliens, the OIG determined as part of an audit. The OIG discovered that the overpayments resulted from errors in the system used by the state to verify alien qualification for Medicaid. The OIG recommended that the state refund the overpayments and take steps to correct the verification system.

Medicaid Restrictions

Federal health care benefits are typically only allowable when they are provided to certain classes of persons: U.S. citizens, U.S. nationals, or qualified aliens. A further limitation exists for qualified aliens. Generally, qualified aliens are not permitted to receive federal benefits until five years after entering the U.S. with qualified alien status. However, before the five-year period runs, qualified aliens may receive services necessary to treat an emergency medical condition and, if a state elects to allow them, services provided to certain lawfully residing children and pregnant women.


States are obligated to maintain systems to determine whether qualified aliens have met the required five-year waiting period. The HHS Office of Inspector General (OIG) conducted a review of California’s verification system, to determine whether the California Department of Health Care Services correctly identified all nonreimbursable claims for nonemergency services provided to qualified aliens.

California System

To meet its federal requirements, California created the quarterly alien claiming adjustment report adjustment report in its Medicaid Management Information System (MMIS). The adjustment report was designed to identify services provided to qualified aliens who had not satisfied the waiting period requirement.


The OIG audit included quarters ending June 2010, September 2010, June 2011, June 2012, June 2013, and June 2014. During that time, the California agency identified $215.9 million as nonemergency services provided to qualified aliens for which the state did not claim Federal Medicaid reimbursement. However, the OIG determined that the state agency did not identify all the necessary claims for its adjustment reports. Specifically, the OIG identified errors when claims were approved for payment in one quarter and paid in a later quarter. As a result of those errors, the state agency claimed $9,872,618 in unallowable federal Medicaid reimbursement.


The OIG recommended that the state agency: (1) refund the $9,872,618 to the federal government; (2) identify and refund any subsequent overpayments; and (3) ensure, in the future, that the MMIS correctly identifies all nonreimbursable claims for nonemergency services provided to qualified aliens. The state agency partially agreed with the first recommendation, noting its belief that the refund amount was overstated. The state agency agreed with the second and third recommendations.