Hatch, Upton Press CMS on Arkansas Waiver Expanding Medicaid Under Health Care Law

WASHINGTON, DC – Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and House Energy and Commerce Committee Chairman Fred Upton (R-MI), today sent Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner a letter asking for clarification regarding CMS’s issuance of a waiver pertaining to Arkansas’ Medicaid program.

The letter follows a new Government Accountability Office (GAO) report, requested by Upton and Hatch, that examined CMS’s role in approving a Medicaid waiver for Arkansas’ expansion of the program under the Patient Protection and Affordable Care Act (PPACA). This report was the first GAO analysis of Medicaid expansion under PPACA. In the report, GAO raised serious concerns about the cost-effectiveness and budget neutrality of Arkansas’ demonstration program.

The independent watchdog report found CMS approved a spending limit for Arkansas’ 1115 Medicaid waiver that assumed that the state would make significantly higher payments to providers under expanded coverage than were currently made under the traditional Medicaid program. GAO found that CMS did not request any data to support the state’s assumptions.

“Despite CMS’s failure to review the details of Arkansas’ proposal, the state’s waiver assumptions generate real extra costs for federal taxpayers. GAO estimated that the spending limit that CMS approved for the state demonstration is $778 million higher than it would have been if actual payment rates for services provided to newly-eligible adult beneficiaries were included across the duration of the proposal. GAO also noted that CMS waived its cost-effectiveness requirement for Arkansas’s premium assistance program, allowing the state to use its own tests of cost-effectiveness without any external validation. …While we are supportive of states’ ability to use premium assistance programs to create innovative benefit designs for individuals to use premium assistance programs to create innovative benefit designs for individuals in their state, we also have a responsibility to ensure that federal dollars are accounted for in a transparent and accurate manner,” the lawmakers wrote.

Read the complete letter online here.

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