The CMS needs to be more transparent in its evaluation and approval of Medicaid demonstrations, the Government Accountability Office said Wednesday. The GAO asked Congress to step in because billions are being overspent and it blames the CMS for lack of oversight it says endangers the Medicaid program. The CMS didn't attend the hearing.
In fiscal 2011, Section 1115 demonstrations accounted for about one-fifth of Medicaid expenditures, rising to nearly one-third of total federal Medicaid expenditures in fiscal 2014, an estimated $89 billion in federal funds. The waivers allow states to experiment in their Medicaid programs to improve services to beneficiaries. Waivers must be budget-neutral, meaning the CMS is spending the same amount of money on a state that it would have spent without a waiver.
The GAO has issued multiple reports going back into the 1990s in which it noted that CMS' process for approving state spending for demonstrations is opaque and doesn't ensure that demonstrations will be budget-neutral.
The nonpartisan watchdog group says it found numerous cases in which states overspent by billions. For example, in 2013 and 2014, five demonstrations reviewed by the agency spent $33 billion more than what documentation would have supported.
“We're concerned about the long-term stability of the Medicaid program,” Katherine Iritani, director of healthcare at the GAO said Wednesday in a hearing hosted by the House Energy and Commerce Committee's Subcommittee on Health.
Despite the seriousness of the claims, the CMS declined to participate in the hearing, much to the frustration of lawmakers at the hearing.
“We gave the agency two weeks' notice and offered two different potential hearing dates. Nevertheless, despite all the people that work at the CMS, the administration declined to make anyone available to testify,” said Rep. Joe Pitts (R-Pa.), chairman of the subcommittee.
“CMS' refusal to come today would be unfortunate under any circumstance, but it is particularly concerning since roughly 1 in 3 Medicaid dollars are spent on 1115 demonstrations,” he added.
A CMS representative did not immediately return a request for comment on their lack of participation.
House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said the agency could be abusing its authority with the demonstrations.
“Recent analysis and media coverage has raised questions over the degree to which the CMS is effectively picking winners and losers in the waiver review process, “Upton said.
Rep. Kurt Schrader (D-Ore.) expressed concern that too-prescriptive guidelines for awarding 1115 waivers could impede state innovation. Schrader expressed support of an approval process that emphasized healthcare outcomes.
State Medicaid directors would be open to legislation that would increase transparency and bring predictability to the 1115 approval process, but may be wary if the CMS was forced to operate under strict timelines in approving applications.
The applications can be complex and voluminous and the CMS is short-staffed, said Matt Salo, executive director of the National Association of Medicaid Directors.
“A short clock might get them to a 'no' faster,” Salo said.
If Congress were to draft legislation, Salo would rather see more emphasis be placed on establishing a concrete path to making a demonstration permanent if it is shown to be successful.