MEDICAID: HCFA Reversed Its Position and Approved Additional State Financing Schemes
Abstract
States have been searching for ways to help finance the $196 billion Medicaid program, a jointly funded federal-state program providing health care services to certain low-income, elderly, and disabled people. Over the years, some states have taken advantage of the flexibility that the Congress has built into the Medicaid program by devising financing schemes that inappropriately boost the federal share of program expenditures. Last year, we testified about a regulatory loophole some states were exploiting increase federal Medicaid payments under existing upper payment limit provisions. These provisions represent upper bounds on what the federal government is willing to pay as its share of the costs of different classes of covered services. States were inappropriately increasing federal Medicaid payments by paying nursing homes and hospitals owned by local governments more than they would normally receive and then having them return the bulk of the extra money to the state. The states then sought federal matching funds based on the full amount they paid to providers which they were free to use as they wished. These schemes were adding billions of dollars a year to federal Medicaid costs without the states paying their statutorily specified share of program costs and with some of the federal funds being spent for non-Medicaid purposes. The Congressional Budget Office concluded in January 2001 that such schemes were the most notable factor behind recent increases in federal Medicaid spending, which is growing at a rate nine times that of the Medicaid population.
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 01, 2001
- Accession Number
- ADA396807
Entities
Organizations
- United States Government Accountability Office