TOPEKA ? Gov. Kathleen Sebelius today expressed frustration with the federal government over $32.6 million the state will pay back over disputed Medicaid expenditures.

“The rules continue to change and that really is the growing frustration,” Sebelius said.

“We have plans that are approved only to be told down the way that that really isn’t the way they are going to audit anymore, it’s really not the way they are going to count anymore,” she said.

Kansas has agreed to repay another $18.5 million to the U.S. government after auditors found the state misspent money from the federal Medicaid program.

That makes $32.6 million the state has agreed to pay back this year. And the refund tally could grow, given that $135 million in federal aid has been under review.

Kansas earlier agreed to refund $14.1 million to compensate for incorrect billings detected by a series of audits by the Department of Health and Human Services Office of Inspector General.

The latest round of agreed paybacks was made public today in a report released by the inspector general’s office.

“It’s a new figure independent from findings of previous reports,” Laura Bradbard, a spokeswoman for the office, said Thursday.

Bradbard and auditors in the office declined further comment, saying it was too early to talk about the report. The state will have 30 days to file a formal reply.

Judy Holtz, another federal spokeswoman, said the audits of Medicaid spending in Kansas were similar to others taking place across the nation.

“There’s a bunch of these in a variety of states, ” she said.

Sebelius said many states have tried to come to some kind of agreement with the federal government.

“It’s a topic that all governors have high on our agenda every time we meet with the secretary and the White House,” she said. “I think this dispute involves some claims made in 2001 and 2002. We’d kind of like to resolve this and have a global settlement, if you will, and move forward.”

Federal auditors uncovered a bevy of problems with the way Kansas was distributing Medicaid money to public schools for health services.

An audit report released in February examined how Kansas billed Medicaid to pay for services for children with special needs. Investigators said a sample of 300 Medicaid claims from three school districts – Wichita, Kansas City and the Central Kansas Cooperative – in 2002 turned up 217 claims that shouldn’t have been paid:

¢ Seventy-six claims lacked a required doctor’s order for occupation and speech-language therapy services.

¢ One hundred thirty-nine claims lacked evidence that services had ever been rendered.

¢ Two claims lacked a required doctor’s order for physical therapy.

Another audit showed the state was using Medicaid dollars to fund 12 months of services per year instead of the allowed nine months.

“We didn’t pay for services that weren’t provided. These were services that were received for 12 months,” said Gavin Young, a spokesman at the state Division of Health Policy and Finance. “But the regulations say we can only pay for nine months’ worth.”

How that payback or the shift to a correct nine-month billing schedule will affect children receiving services – physical, occupational and speech therapies, mostly – remains to be seen.

Most of the audits examined payments made in fiscal years 1998 through 2003.

According to the audit report to be released today, “Kansas did not have adequate internal controls to ensure that it correctly developed the payment rate” for services.