WASHINGTON—The CMS could save billions of dollars if it did a better job vetting Medicaid demonstration waiver applications, the Government Accountability Office says in a report released Tuesday.
The finding was detailed in the government watchdog's annual report that outlines ways that federal agencies can achieve cost savings.
“We found that federal spending on Medicaid demonstrations could be reduced by billions of dollars if HHS were required to improve the process for reviewing, approving and making transparent the basis for spending limits approved for Medicaid demonstrations,” the report says.
“There are clear inefficiencies that need to be addressed immediately,” House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-Utah) said in a statement before a Tuesday hearing on the report. “The committee will examine recommendations made by the GAO to ensure that the necessary reforms are being implemented.”
Various reports published by the GAO between 2002 and 2014 have shown that HHS approved several demonstrations without ensuring that they would be budget-neutral. In exchange for agreeing to allocate a certain amount of federal Medicaid funds to be spent in a more flexible way, states must certify that the policies will create offsetting savings.
Last fall for instance, the GAO estimated that the CMS would end up spending about $778 million more over three years for Arkansas' Medicaid expansion program than it would have if the federal spending on the program was in line with the state's actual payment rates for services under traditional Medicaid.
To address the issue, the report suggests, Congress could require the HHS secretary to improve the review criteria, ensure that valid methods are used to demonstrate budget neutrality and provide a clear basis for the approved spending limits.
