Feds say Idaho was overpaid $3.1M for kids’ health insurance. Idaho disagrees.

A federal health agency overpaid Idaho $3.1 million between fiscal years 2010 and 2013, according to an audit by the Office of Inspector General of the U.S. Department of Health and Human Services.

The overpayment was Idaho’s fault and the state should have to give the money back, the audit concluded. Idaho officials disagree, saying they followed the rules and the money was fairly distributed.

The funds came from a multibillion-dollar “bonus” program that Congress authorized in 2009 to help states cover the increased number of children on government health insurance after the economy crashed. The OIG has concluded, after similar audits of other states, that at least nine other states got overpayments from the bonus program.

According to the audit, Idaho “overstated” the number of children who were eligible. The government auditors say states were given certain categories the bonus program would cover, but Idaho added children under another category, those who were “blind and disabled.” That led to Idaho’s getting $3.1 million more than it qualified for, the audit said.

The Idaho Department of Health and Welfare doesn’t deny that it included “blind and disabled” children. But it argues that the rules actually allowed that.

“If Congress intended [blind and disabled] children to be excluded, it would have” specified that, IDHW Director Russ Barron wrote in a response to the audit. The Centers for Medicare and Medicaid Services’ “interpretation is erroneous, contrary to statute, and does not withstand scrutiny.”

Barron also questioned how the auditors arrived at the $3.1 million figure, when Idaho’s total bonus payments were only $3.8 million. Barron said the federal government’s request to get such a large chunk of the state’s money back was “disproportionate and inequitable.”

The state has not yet paid back any funds.

“We are working with CMS on our concerns about the validity of the report, and we will work out a repayment schedule if it comes to that,” the department said in an email to the Statesman.

The dispute over payments won’t be an issue moving forward because the bonus program ended in 2013, the department said.

Audrey Dutton: 208-377-6448, @audreydutton