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GAO: CMS Should Pay More Attention to States’ Financing of Medicaid

The federal government does not adequately monitor how states finance their Medicaid programs.

It also lacks a sufficiently clear understanding of how they pay providers of Medicaid-covered services.

These are among the conclusions in a new study on Medicaid financing and payments by the U.S. Government Accountability Office.

According to the GAO report,

GAO estimated that states’ reliance on provider taxes and local government funds decreased states’ share of net Medicaid payments (total state and federal payments) and effectively increased the federal share of net Medicaid payments by 5 percentage points in state fiscal year 2018.  It also resulted in smaller net payments to some providers after the taxes and local government funds they contribute to their payments are taken into account. While net payments are smaller, the federal government’s contribution does not change. This effectively shifts responsibility for a larger portion of Medicaid payments to the federal government and away from states.

To address this challenge, the GAO urged CMS to collect more complete and consistent information about both state financing of their Medicaid programs and the manner in which states pay Medicaid providers.  CMS neither agreed nor disagreed with the GAO’s recommendation.

Such a study could have implications for Pennsylvania safety-net hospitals because of the state’s growing dependence on provider taxes to fund its Medicaid programs in recent years.

Learn more about what the GAO found and recommended in its new report “Medicaid:  CMS Needs More Information on States’ Financing and Payment Arrangements to Improve Oversight.”

Filed in Federal Medicaid issues, Pennsylvania Medicaid, Pennsylvania Medicaid policy, Pennsylvania safety-net hospitals.

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