Topeka ? A key federal official says Kansas is on the “right path” in straightening out its Medicaid funding mess.

“Kansas has come a long way to resolve a number of issues,” Tom Lenz, regional administrator for the Centers for Medicare and Medicaid Services, said in a recent interview.

In the legislative session completed last week, Gov. Kathleen Sebelius and the Legislature agreed to allocate approximately $121 million during the next 15 months to settle Medicaid funding disputes with the federal government.

Medicaid is the taxpayer-financed health insurance program that provides coverage to approximately 10 percent of the Kansas population.

In Kansas, the federal government pays for about 60 percent of Medicaid, while the state supplies the remaining 40 percent.

In a series of audits, CMS alleged questionable funding in the state’s special education program and a lack of documentation for some special education and foster care expenses.

In the 1990s and early 2000s, Lenz said, nearly every state in the country engaged in similar practices in trying to draw a maximum of federal dollars.

“A vast number of states used all kinds of creative systems to leverage more federal dollars,” he said.

In reaching an agreement with CMS, Kansas will have to make up for the loss of some future Medicaid funds.

Marcia Nielsen, executive director of the Kansas Health Policy Authority, which took over Medicaid operations last year, said it became apparent that the best way to handle the federal audits was to change state procedures and settle up with CMS.

“We were sort of dying a death by a thousand paper cuts. I thought, ‘If this goes on, we’re going to have to pay $200 million to $300 million,'” Nielsen said.

Lenz said Kansas policymakers are on the “right path” and that he had confidence in the Health Policy Authority to follow the CMS rules.