According to the federal government, the state of New Jersey owes it about $50 million for Medicaid payments it never should have received.

A report publicly released Monday found hospitals in the Garden State received Medicaid payments for which they didn't qualify.

At issue are payments to five hospitals that got "disproportionate share" funds from 2003 to 2007. That is money meant to go to hospitals that provide care to people with no insurance and no way to pay. But the federal Department of Health and Human Services' Office of Inspector General found those five hospitals didn't actually qualify for that money.

"We were doing other audit work," said John Hagg, director of medicaid audits for the Office of Inspector General at HHS, "and we saw that the state made payments to hospitals that weren't eligible. And that's what caused us to want to go in and do a full audit."

A New Jersey Department of Human Services spokeswoman wrote in an email that the state believes it owes only about $3.5 million, not $50 million. She insists the Medicaid claims submitted were correct, with one
exception.

Hagg said the arm of the federal government that administers Medicaid has six months to agree or disagree with the inspector general's findings and, if it agrees, demand payment from New Jersey.