Sen. Ron Johnson, R-Wis., is demanding the Trump administration answer how it is going to end “shell games” through which states artificially inflate their contributions to Medicaid in order to get a greater share of federal funding.
Johnson sent letters on Friday to Centers for Medicare & Medicaid Services Administrator Seema Verma and U.S. Comptroller General Gene Dodaro regarding a lack of audits of states’ use of Medicaid funding.
“Without timely, complete and accurate data subject to independent audits, CMS and Congress cannot determine the extent of Medicaid maximization schemes and how much they are costing federal taxpayers,” Johnson wrote to Verma.
States and the federal government jointly fund Medicaid and the two share expenses. The federal government matches states’ payments for Medicaid services.
Johnson charges that the federal government’s commitment for Medicaid funding is “open-ended” and incentivizes states to explore ways to get more money from the federal government for Medicaid.
He gave an example of a tax that some states levy on hospitals. States return the revenue from the tax back to hospitals as Medicaid payments, triggering a higher reimbursement from the federal government.
Johnson wrote that more than 40 states use this tax as a way to get more money from the federal government.
Another scheme involves transfers of Medicaid funding from state Medicaid agencies to county or local agencies. Johnson cited a GAO report from 2004 that detailed Michigan’s use of this practice. Michigan paid $122 million in state funds to county facilities, triggering a $155 million federal match, making a total of $277 million. That same day, the county facilities transferred back all but $6 million of that $277 million back to the state. The state got a net gain of $149 million over the original expenditure of $122 million, Johnson wrote.
Johnson said that CMS doesn’t generally require or collect information from states on the funds they use to finance Medicaid or ensure that the data is accurate.
He called on CMS to lay out the actions it is taking to crack down on such schemes. The senator is also calling for an explanation on why CMS hasn’t historically collected data form states on the funds they use to finance their share of Medicaid.
CMS did not immediately return a request for comment.
