CMS Allocated DRA Funds to Three Funding Categories

As of September 30, 2006, CMS had allocated approximately $1.9 billion of  the total $2 billion in DRA funds to states that were directly affected by  Hurricane Katrina or that hosted evacuees in the aftermath of the storm. CMS chose not to allocate any DRA funding to  Category IV, for restoring access to health care in impacted communities. CMS allocated the majority of DRA funding (78.3 percent of the $1.9 billion  allocated) to Category III, the nonfederal share of expenditures for  existing Medicaid and SCHIP beneficiaries, which, by law, was limited to  the three directly affected states (Alabama, Louisiana, and Mississippi). 2.) CMS first allocated  $1.5 billion to 32 states on March 29, 2006. After the DRA was enacted in  February 2006, CMS requested states’ estimated fiscal year 2006  expenditures for three of the four DRA funding categories: Category I—the  nonfederal share of expenditures for time-limited Medicaid services;  Category II—expenditures for time-limited uncompensated care services;  and Category III—for directly affected states, the nonfederal share of  expenditures for existing Medicaid and SCHIP beneficiaries. After this reconciliation is completed, CMS will determine how to allocate  the remaining $136 million of available DRA funds and any unexpended  funds of the approximately $1.9 billion previously allocated to states. States Have Submitted Claims for About Half of Total DRA Allocations

As of October 2, 2006, states had submitted to CMS claims for services— including associated administrative costs—totaling about $1 billion (or   54 percent) of the $1.9 billion in DRA funds allocated to them. Each of the 4 selected states we  reviewed—Alabama, Louisiana, Mississippi, and Texas—had submitted  claims by this time. In addition, claims from the three  directly affected states for existing Medicaid and SCHIP beneficiaries  accounted for about 85 percent of all DRA claims filed. Therefore, these initial results are likely to  change as states continue to file claims for services. Louisiana and Texas Raised Concerns Regarding Future Funding Needs

Two of our four selected states raised concerns about their ability to meet  the future health care needs of those affected by the hurricane once DRA  funds have been expended: Louisiana, which is eligible for DRA funding  for Category III services that may be provided beyond June 30, 2006; and  Texas, which is not eligible for such ongoing assistance. Alabama and Mississippi  officials did not anticipate the need for additional funding beyond what  was already allocated by CMS. Louisiana’s funding concerns were associated with managing its program  across state borders as evacuees who left the state continue to remain  eligible for Louisiana Medicaid. Agency and State Comments and Our Evaluation

We provided copies of a draft of this report to CMS and the four states we  reviewed: Alabama, Louisiana, Mississippi, and Texas. Alabama provided  technical comments, while Mississippi did not comment on the draft  report. Comments from Louisiana and Texas centered on each state’s efforts to  assist those affected by the hurricane and the ongoing challenges that  exist as a result of Hurricane Katrina. GAO staff who made major contributions to this report are  listed in appendix V.

Appendix I: Deficit Reduction Act of 2005 Allocations to 32 States

Under the authority of the Deficit Reduction Act of 2005, the Centers for  Medicare & Medicaid Services (CMS) allocated funding totaling  approximately $1.9 billion to 32 states, as of September 30, 2006.
Why GAO Did This Study

In February 2006, the Deficit Reduction Act of 2005 (DRA) appropriated $2 billion for certain health care costs related to Hurricane Katrina through Medicaid and the State Children's Health Insurance Program (SCHIP). The Centers for Medicare & Medicaid Services (CMS) was charged with allocating the $2 billion in funding to states directly affected by the hurricane or that hosted evacuees. GAO performed this work under the Comptroller General's statutory authority to conduct evaluations on his own initiative. In this report, GAO examined: (1) how CMS allocated the DRA funds to states, (2) the extent to which states have used DRA funds, and (3) whether selected states--Alabama, Louisiana, Mississippi, and Texas--anticipate the need for additional funds after DRA funds are expended. To conduct this review, GAO reviewed CMS's allocations of DRA funds to all eligible states, focusing in particular on the four selected states that had the highest initial allocation (released by CMS on March 29, 2006). GAO obtained data from Medicaid offices in the four selected states regarding their experiences enrolling individuals, providing services, and submitting claims; collected state Medicaid enrollment data; and analyzed DRA expenditure data that states submitted to CMS.

What GAO Found

As of September 30, 2006, CMS allocated $1.9 billion of the $2 billion in DRA funding to states. CMS allocated funds to: Category I--the nonfederal share of expenditures for time-limited Medicaid and SCHIP services for eligible individuals affected by the hurricane (32 states); Category II--expenditures for time-limited uncompensated care services for individuals without a method of payment or insurance (8 of the 32 states); and Category III--the nonfederal share of expenditures for existing Medicaid and SCHIP beneficiaries (Alabama, Louisiana, and Mississippi). CMS did not allocate funds to Category IV--for restoration of access to health care. After CMS reconciles states' expenditures with allocations, it will determine how to allocate the unallocated $136 million and unexpended funds from the $1.9 billion allocated to states. Of the $1.9 billion in allocated DRA funds, almost two-thirds of the 32 states that received these funds submitted claims totaling about $1 billion as of October 2, 2006. Claims from Alabama, Louisiana, and Mississippi for Category III accounted for about 85 percent of all claims filed. These initial results are likely to change as states continue to file claims for services. Of the four selected states, Louisiana and Texas raised concerns about their ability to meet future health care needs once the DRA funds are expended. Louisiana's concerns involved managing its Medicaid program across state borders as those who left the state remain eligible for the program. Texas was significantly affected by the number of evacuees seeking services, thus raising concerns among state officials about the state's future funding needs. CMS, Alabama, Louisiana, and Texas commented on a draft of this report. CMS suggested the report clarify the DRA funding categories, reallocation process, and communication strategy with states, especially Louisiana. Louisiana and Texas commented on their ongoing challenges, and Alabama provided technical comments. The report was revised as appropriate.