Waste of the Day: $38.5 Billion In Medicaid Funds Improperly Managed
Topline: State governments spent $38.5 billion to increase Medicaid payouts in 2022, but there is little oversight of how the money is being used, according to a U.S. Government Accountability Office report.
Key facts: Typically, state governments send money to Medicaid Managed Care, which pays healthcare centers on behalf of patients as needed.
But since 2017, states have been allowed to send extra money directly to clinics to try and improve the quality of healthcare. The practice was originally meant to be used sparingly, but it’s becoming more common.
State governments spent over $38.5 billion on these “directed payments” in 2022, which are managed by the Centers for Medicare and Medicaid Services.
But according to the GAO, there are “weaknesses” in “CMS procedures for approving such payments.”
The report says that CMS has “weak fiscal guardrails,” meaning states often do not keep track of whether a healthcare provider is using its funds effectively before sending it more money.
The GAO evaluated five states and found that none of them were “consistently” evaluating whether the extra billions of dollars spent on Medicaid were actually having an impact on patient outcomes. In Texas, some hospitals received more than double the standard amount of funds, with little to no oversight.
The causes of this issue varied. Some states had flawed data software; some were simply not “implementing best practices.”
CMS also has not set any clear limits on the amount of money a single healthcare provider can receive.
Background: Eighteen states each spent over $500 million on directed payments in 2022, with California and Texas each giving out almost $7 billion.
Most of the money came from taxes on private healthcare providers, while some came from state general funds and other sources.
The United States spent $804 billion on Medicaid overall in 2022.
Summary: States are gaining more influence every year over how Medicaid funds are dispersed, yet they don’t have enough systems in place to prevent potential wasteful spending.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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