26 States Must Repay U.S. for Benefit Errors

Health and Human Services Secretary Margaret M. Heckler told California and 25 other states today they must repay a total of $81.7 million to the federal government as penalties for high error rates in child welfare and Medicaid payments.

California was ordered to repay $35 million.

Heckler said in a statement that she had rejected the appeals of 22 states that had excessively high error rates for payments made under the Aid to Families with Dependent Children program. Those states must return $69.2 million.

The secretary said she also rejected the appeals of nine states with high error rates under Medicaid. Those states must return $12.5 million, she said.

Five states--Hawaii, Idaho, Nebraska, Oklahoma and Washington--must pay penalties because of error rates in both programs, the department said.

However, the secretary added, she granted waivers to six states with high error rates for AFDC payments and to three states with high error rates for Medicaid because of “good faith” efforts to meet the goals.

First Penalties Levied

The penalties, assessed for payments made in 1981, are the first levied under a 1979 law Congress enacted to curb soaring error rates in welfare programs. The error rate--defined as overpayments or payments made to ineligible people--reached as high as 16.5% in 1973, Heckler said.

The 1979 law ordered states to reduce the error rate to 4% of total benefit payments or face sanctions, beginning with 1981 welfare payments.

By 1981, the error rate had dropped to 7.6% nationwide, Heckler said.