Medicaid Funding

Medicaid is funded jointly by the federal government and states. Medicaid Funding for Different Eligibility Groups

. subsequently deemed eligible under PPACA if the state opted to expand  Medicaid under PPACA. 2. Consequently, a state that chooses to expand its  Medicaid program could potentially receive three different FMAPs for its  different types of Medicaid enrollees. Medicaid Enrollment

States are primarily responsible for verifying eligibility and enrolling  Medicaid beneficiaries. PPACA- and State- Expansion Enrollees Comprised about 14 Percent of 2014 Medicaid Enrollees and about 10 Percent of Expenditures

PPACA- and state-expansion enrollees comprised about 14 percent of  Medicaid enrollees at the end of the last quarter in calendar year 2014. Most of these individuals—about 60.1 million—were traditionally  eligible enrollees—comprising about 86 percent of total enrollees. About  9.7 million of the 2014 enrollees—approximately 14 percent—were  PPACA-expansion or state-expansion enrollees, with 7.5 million (11  percent of all Medicaid enrollees) as PPACA-expansion enrollees and 2.3  million (3 percent of all Medicaid enrollees) as state-expansion enrollees. Expenditures for PPACA- and State-Expansion Enrollees Comprised about 10 Percent of Spending for 2014 Medicaid Enrollees

As of June 2, 2015, states had reported $481.77 billion in Medicaid  expenditures for services in calendar year 2014. Of this total,  expenditures for traditionally eligible enrollees were $435.91 billion  (comprising about 90 percent of total expenditures), about $35.28 billion  (7 percent of total expenditures) was for PPACA-expansion enrollees and  $10.58 billion (2 percent of total expenditures) was for state-expansion  enrollees. Limitations in Eligibility and Expenditure Reviews Hamper CMS’s Ability to Ensure the Appropriateness of Federal Matching Funds

CMS has implemented reviews that (1) assess the accuracy of eligibility  determinations, and (2) examine states’ expenditures to ensure they are  attributed to the correct eligibility group. However, both reviews contain  gaps that limit CMS’s ability to ensure that expenditures for the different  eligibility groups are appropriately matched with federal funds. However, the pilot eligibility reviews do not include a review of the  accuracy of federal eligibility determinations in certain states that  delegated authority to the federal government to make Medicaid eligibility  determinations through the FFE. CMS’s Expenditure Reviews Cannot Identify Eligibility-Related Errors, Limiting Assurance that Expenditures Are Appropriately Matched with Federal Funds

CMS modified its standard quarterly review of CMS-64 expenditures to  examine expenditures for both categories of the expansion population. According to CMS officials, the expenditure review  is primarily intended to ensure that states are correctly grouping  expenditures for the different eligibility groups as initially determined, not  whether the determination is correct. By excluding Medicaid eligibility  determinations made by the FFEs from its pilot eligibility reviews, CMS  has created a gap in efforts to ensure that only eligible individuals are  enrolled into the Medicaid program. Furthermore, although CMS has a  process for assessing the accuracy of eligibility determinations in the  states, CMS does not use the results of these eligibility reviews, which  have the potential to provide valuable information on state eligibility  determinations, to better target its review of Medicaid expenditures for  different eligibility groups. To increase assurances that states receive an appropriate amount of  federal matching funds, we recommend that the Administrator of CMS  use the information obtained from state and federal eligibility reviews to  inform the agency’s review of expenditures for different eligibility groups  in order to ensure that expenditures are reported correctly and matched  appropriately. GAO staff who made key contributions to this  report are listed in appendix V.

Appendix I: Comments from the Department of Health and Human Services

Appendix II: Scope and Methodology

To determine the enrollment and spending for individuals who enrolled in  Medicaid in 2014, and the extent to which these individuals were  identified as eligible under the Patient Protection and Affordable Care Act  (PPACA), we examined data submitted to the Centers for Medicare &  Medicaid Services (CMS) by states as part of their enrollment and  expenditure reporting. We obtained enrollment and expenditure data for calendar year 2014— the first full year that states had the option of expanding Medicaid under  PPACA.
Why GAO Did This Study

Historically, Medicaid eligibility has been limited to certain categories of low-income individuals, but PPACA, enacted on March 23, 2010, gave states the option to expand coverage to nearly all adults with incomes at or below 133 percent of the federal poverty level, beginning January 1, 2014. States that do so are eligible for increased federal matching rates for enrollees receiving coverage through the state option to expand Medicaid under PPACA, and where applicable, enrollees in states that expanded coverage prior to PPACA's enactment.
GAO was asked to examine Medicaid enrollment and expenditures, and CMS oversight of the appropriateness of federal matching funds. This report examines (1) Medicaid enrollment and spending in 2014 by different eligibility groups; and (2) how CMS ensures states are accurately determining eligibility, and that expenditures are appropriately matched. GAO analyzed enrollment and expenditure data for enrollee eligibility groups submitted by states to CMS, examined relevant federal laws and regulations, internal control standards, CMS guidance and oversight tools, and interviewed CMS officials.

What GAO Found

PPACA-expansion and state-expansion enrollees—individuals who were not eligible under historic Medicaid eligibility rules but are eligible under (1) a state option to expand Medicaid under the Patient Protection and Affordable Care Act (PPACA), or (2) a state's qualifying expansion of coverage prior to PPACA's enactment—comprised about 14 percent of Medicaid enrollees and about 10 percent of Medicaid expenditures at the end of 2014. According to GAO's analysis of state reported data, of the approximately 69.8 million individuals recorded as enrolled in Medicaid, about 60.1 million were traditionally eligible enrollees, comprising about 86 percent of the total; about 7.5 million (11 percent of all Medicaid enrollees) were PPACA-expansion enrollees, and 2.3 million (3 percent of all Medicaid enrollees) were state-expansion enrollees. With regard to expenditures, states had reported $481.77 billion in Medicaid expenditures for services in calendar year 2014. Of this total, expenditures for traditionally eligible enrollees were $435.91 billion (about 90 percent of total expenditures), expenditures for PPACA-expansion enrollees were about $35.28 billion (7 percent of total expenditures), and expenditures for state-expansion enrollees were $10.58 billion (2 percent of total expenditures).
Proportion of Medicaid Enrollees by Eligibility Group, Last Quarter of Calendar Year 2014
The Centers for Medicare & Medicaid Services (CMS), which oversees Medicaid, has implemented interim measures to review the accuracy of state eligibility determinations and examine states' expenditures for different eligibility groups, for which states may receive up to three different federal matching rates. However, CMS has excluded from review federal Medicaid eligibility determinations in the states that have delegated authority to the federal government to make Medicaid eligibility determinations through the federally facilitated exchange. This creates a gap in efforts to ensure that only eligible individuals are enrolled into Medicaid and that state expenditures are correctly matched by the federal government. In addition, CMS reviews of states' expenditures do not use information obtained from the reviews of state eligibility determination errors to better target its review of Medicaid expenditures for the different eligibility groups. An accurate determination of these different eligibility groups is critical to ensuring that only eligible individuals are enrolled, that they are enrolled in the correct eligibility group, and that states' expenditures are appropriately matched with federal funds for Medicaid enrollees, consistent with federal internal control standards. Consequently, CMS cannot identify erroneous expenditures due to incorrect eligibility determinations, which also limits its ability to ensure that state expenditures are appropriately matched with federal funds.

What GAO Recommends

GAO recommends that CMS (1) review federal determinations of Medicaid eligibility for accuracy, and (2) use the information obtained from the eligibility reviews to inform the expenditure review, and increase assurances that expenditures for the different eligibility groups are correctly reported and appropriately matched. In its response, the agency generally concurred with these recommendations.