A nonpartisan government watchdog on Thursday said it plans to examine HHS' distribution of $175 billion in COVID-19 relief grants to healthcare providers.
The Government Accountability Office noted in a report on COVID-19 relief spending that it will be important for HHS to ensure it has robust internal controls to make sure funds go to eligible providers.
"For example, it is important that funds not be provided to ineligible providers, such as hospitals that have closed, despite the imperative of a quick federal response to the COVID-19 crisis," the report stated.
Funds went to some closed hospitals because an initial $30 billion general distribution was based on outdated billing data, Modern Healthcare reported in April.
The GAO also focused on increased federal Medicaid matching funds in its report. The Families First Coronavirus Response Act increased states' Medicaid matching rate by 6.2% through the end of the COVID-19 public health emergency. The current emergency designation expires in July, though HHS could renew it for another 90 days.
The GAO instead recommended a formula developed to adjust Medicaid matching rates based on individual states' unemployment rates and wage and salary levels. The change would better target the relief and gradually decrease in funds as states recover, the GAO said.
Prior recessions caused states to cut provider pay rates, and the GAO noted that states' economic woes lasted beyond when recessions technically ended.
"State budget challenges—due to increased unemployment and lowered tax revenues—can persist well beyond the end of a recession," GAO wrote.
For example, the GAO formula would have provided Medicaid assistance to states for more than two years after the recession triggered by the financial crisis officially ended in 2009.
Providers have seen more Medicaid rate cuts during and after recessions, as states have limited options to cut funds from the program as enrollment increases.
Democrats' opening bid for Congress' next COVID-19 relief package would further increase Medicaid matching rates to 14% through June 2021, and does not include economic triggers like those GAO is recommending.
