The state must repay the federal government $1.3 million for Medicaid money misspent on ineligible in-home care services.
A federal audit of claims from Shipman Family Home Care's Greensboro office found that 56 of 100 sample items did not meet state and federal requirements for Medicaid reimbursement.
The audit looked at claims from July 1, 2005 to June 30, 2007 that were paid by the state and federal insurance program for the poor and disabled.
The deficiencies occurred because the state does not have enough resources to properly monitor Shipman's personal care program, the report said.
In its formal response, Shipman said the findings did not represent its overall compliance efforts.
In his written response, state Department of Health and Human Services secretary Lanier Cansler said the state has stepped up monitoring of home care agencies in general, and has a state-approved plan to target the services to people who are most in need.
The federal government has not approved the changes.
The office is also auditing services at randomly selected Shipman sites, Cansler wrote.