GAO Medicaid report addresses eligibility errors and funding

Feb. 13, 2020

The Government Accountability Office (GAO) was asked to review Medicaid eligibility determinations and has released a report that describes what is known about the accuracy of Medicaid eligibility determinations, and the Centers for Medicare & Medicaid Services’ (CMS') efforts to recoup funds related to eligibility errors.

GAO reviewed 47 state and federal audits of Medicaid eligibility determinations across 21 states published between 2014 and 2018. GAO also reviewed relevant federal laws and regulations, and interviewed CMS officials.

The report concluded that states must determine whether people are eligible for Medicaid. The accuracy of these determinations affects federal and state spending. The CMS oversees this process.

GAO review found:

·        Federal and state audits showed several accuracy issues—some of which resulted in errors

·         For decades, the CMS hasn’t recouped federal funds from states with eligibility error rates exceeding 3%—but plans to start in FY 2022

·         The CMS updated its national estimate of inaccurate payments due to eligibility errors in November 2019—the first update since the Affordable Care Act required changes to states’ processes.

·         States are responsible for determining applicants' eligibility for Medicaid, including verifying eligibility at application, redetermining eligibility, and disenrolling individuals who are no longer eligible. The CMS oversees states' Medicaid eligibility determinations. CMS did not publish an updated national Medicaid eligibility improper payment rate from 2015 through 2018 as states implemented the Patient Protection and Affordable Care Act. CMS released an updated rate in November 2019 that reflected new information on eligibility errors from 17 states.

In lieu of complete and updated data, GAO reviewed 47 state and federal audits published between 2014 and 2018 related to 21 states' eligibility determinations. The identified accuracy issues did not always result in erroneous eligibility determinations. For example, some audits found applicants were determined eligible based on incomplete financial information, but when the audits reviewed additional information they found that the applicants still would have been eligible for Medicaid; and eligibility determinations complied with state policies and federal requirements, but noted that changes in state practices—such as using additional data sources to verify applicant information or checking sources more frequently—could improve eligibility determinations.

While CMS is generally required to disallow, or recoup, federal funds from states for eligibility-related improper payments if the state's eligibility error rate exceeds 3 percent, it has not done so for decades, because the method it used for calculating eligibility error rates was found to be insufficient for that purpose. To address this, in July 2017, CMS issued revised procedures through which it can recoup funds for eligibility errors, beginning in fiscal year 2022. In addition, the President's fiscal year 2020 budget request includes a legislative proposal to expand the agency's authority to recoup funds related to eligibility errors. During this period of transition, federal and state audits will continue to provide important information about the accuracy of states' eligibility determinations.

In fiscal year 2018, Medicaid covered approximately 75 million individuals at an estimated cost of $629 billion, $393 billion of which were federal funds. Medicaid eligibility is governed by a network of federal and state laws and regulations. In assessing eligibility for Medicaid, states must determine whether applicants meet eligibility criteria, such as financial and citizenship requirements. The accuracy of eligibility decisions has implications for federal and state spending.

The Patient Protection and Affordable Care Act made significant changes to Medicaid eligibility rules beginning in 2014, including new ways of calculating income and new requirements related to electronically verifying applicants' information. Yet, little is known about the accuracy of states' Medicaid eligibility determinations since these changes were implemented.

GAO has the story.