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Analysis

GAO Finds Transparency Lacking in Medicaid Waiver Amendment Process

By John Commins  
   May 20, 2019

CMS approved waiver extensions, where states submitted changes to their applications that included disenrollment and other penalties, without first hearing public comment.

The approval process for Medicaid waiver amendments lacks transparency and allows states to propose significant changes to their Medicaid Section 1115 applications without detailing the potential effects on enrollees, a new federal review shows.

"CMS does not require amendment applications to include how the changes may affect beneficiary enrollment or report on concerns raised in state public comments," the Government Office of Accountability report released to the public on Friday stated.

"However, states have proposed major changes—such as work and community engagement requirements—through amendments, raising concerns that major changes to states' demonstrations are being approved without a complete understanding of their impact," GAO said.

Forty-three states operate part of their Medicaid program under a 1115 waiver, which amounted to $108 billion in federal spending in 2016, almost one-third of Medicaid's total expenditures. From January 2017 through May 2018, CMS approved applications for a new demonstration, extension, amendment, or a combination of these in 23 states, GAO said.

Demonstrations typically last about five-years but some states have operated parts of the Medicaid programs under demonstration status for decades, GAO said.

GAO examined in detail proposed changes to waiver applications from Kentucky and Indiana that had "substantial potential effects for some beneficiaries," including new eligibility and work requirements, and found inconsistencies in what CMS required from the two states.   

"CMS did not require either state to solicit public input, though both states opted to hold a public comment period on the proposed changes concurrent with CMS's review," GAO said.

"Further, CMS reviewed Indiana's proposed changes against limited transparency requirements but did not do so for Kentucky. Indiana submitted a final version of its application summarizing public input and the state's response, while Kentucky did not."

The Affordable Care Act requires CMS to establish transparency guidelines for Section 1115 demonstrations and extensions, but the law did not address amendments, which are subject to transparency guidelines put down by the Department of Health and Human Services in 1994, GAO said.

To improve transparency, GAO recommended that CMS develop policies to ensure transparency when states propose major changes to pending demonstration applications, and when they propose amendments to existing demonstration projects.

HHS agreed with the recommendations.

“CMS does not require amendment applications to include how the changes may affect beneficiary enrollment or report on concerns raised in state public comments.”

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

States have proposed major changes—such as work and community engagement requirements—through amendments, raising concerns that major changes are being approved without understanding their impact.

From January 2017 through May 2018, CMS approved applications for a new demonstration, extension, amendment, or a combination of these in 23 states.

GAO recommended that CMS develop policies to ensure transparency when states propose major changes to pending demonstration applications, and when they propose amendments to existing demonstration projects.


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