Appeals board allows states to keep disputed Medicaid funds

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Five states do not have to repay the government $982 million in federal Medicaid matching funds due to questionable financing tactics, a Department of Health and Human Services appeals board has ruled.

Hawaii, Illinois, Louisiana, Maine and Tennessee used nursing-home taxes to help fund their Medicaid programs and raise matching funds over a 10-year period beginning in 1992. They then offered grants and tax credits to private-pay nursing home residents.

The appeals board overturned a 2001 decision from the Centers for Medicaid & Medicare Services saying the agency had not provided enough guidance on use of fees, grants and tax credits. CMS sought repayment of some matching funds.