CMS should be more open about reasons behind denying States' plans for funding Medicaid

CMS oversight of state Medicaid financing arrangements is "consistent with Medicaid payment principles but needs greater transparency," according to a Government Accountability Office report released on Monday, CQ HealthBeat reports.

Between August 2003 and August 2006, 29 states ended certain Medicaid financing arrangements because of increased CMS oversight, according to the report. Under the financing arrangements, health care providers operated by local governments receive state Medicaid reimbursements that exceed the actual cost of services, and states receive extra matching funds from the federal government as a result.

According to the report, the increased CMS oversight of the state financing arrangements agreed with Medicaid principles that "payments for services must be consistent with efficiency, economy and quality of care" but "lacked transparency in two ways." CMS did not provide states written protocols for oversight of the Medicaid financing arrangements and did not provide "clear, written explanations" of its reasons to prohibit the arrangements in all cases, the report said (Reichard, CQ HealthBeat , 4/30).

Senate Finance Committee Chair Max Baucus (D-Mont.) praised the report, which he said supports a provision in a $124.2 billion supplemental appropriations bill for military operations in Iraq and Afghanistan that would delay for one year a rule proposed by CMS that would have reduced Medicaid reimbursements to health care providers operated by local governments by an estimated $4 billion over five years. However, committee ranking member Chuck Grassley (R-Iowa) said that the report "underscores the need to get the federal government's reform initiative back on track and out in the open, not to delay it for another single day" ( CongressDaily , 5/1).