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GAO: More Transparency Needed in Federal Review of Medicaid Waiver Proposals

June 3, 2019 at 1:30 PM

Lack of transparency in how the Centers for Medicare & Medicaid Services (CMS) reviews state Medicaid waiver requests “may leave the agency and the public without key information to fully understand the potential impact of the changes being proposed, including on beneficiaries and costs,” according to a new report from the Government Accountability Office (GAO). While acknowledging CMS’ progress in improving transparency, GAO identified areas for further improvement and made two recommendations — but CMS appears unlikely to adopt them fully.

States can request section 1115 Medicaid waivers allowing them to deviate from various federal Medicaid requirements to implement demonstration projects promoting Medicaid’s objectives. Waivers can significantly affect beneficiaries, so transparency in developing and approving them is critical. That’s particularly true under the Trump Administration, which has approved waivers allowing states to take coverage away from beneficiaries who don’t meet work requirements, pay premiums, complete a health assessment, or renew their coverage on time.

As the Affordable Care Act (ACA) required, CMS adopted regulations in 2012 detailing what information state waiver proposals must include and providing opportunity for public comment at both the state and federal levels. The GAO report examined waiver approvals granted from January 2017 through May 2018 and identified several weaknesses in CMS’ approach to transparency:

  • Inconsistent review of compliance with transparency requirements. GAO found inconsistencies in how CMS reviews whether new applications and renewal requests comply with the transparency requirements. CMS deemed some applications complete though they lacked required information, such as expected changes in enrollment. GAO found similar inconsistencies in how CMS reviewed amendments to existing demonstrations.
  • Inconsistent treatment of major state changes to pending applications. GAO found that CMS didn’t consistently ensure transparency when states substantially revised their waiver proposals while they were under CMS review. CMS doesn’t reassess waiver applications for compliance with the transparency requirements when states make major mid-review changes, but even if it did, it doesn’t have criteria for determining when a change is substantial enough for a new review.
  • Limited transparency required for waiver amendments. The regulations and guidance on Medicaid waiver transparency that CMS adopted to comply with the ACA only address new waiver applications and renewal requests; the transparency requirements for amendments to existing demonstrations are much more limited. For example, states don’t have to provide information on expected changes in enrollment and costs even though amendments can significantly reduce enrollment, such as by taking coverage away from beneficiaries who don’t meet a work requirement. Arkansas and New Hampshire didn’t include projected enrollment changes when they submitted their amendment requests to implement a work requirement, GAO noted.
  • Limited transparency on CMS’ rationale for approvals. GAO noted that CMS’ rationale for approving certain requests isn’t always transparent, such as when CMS approved a significant increase in the spending limit for Florida’s Low-Income Pool (which supports providers that serve uninsured residents) without explaining that the approval was based on a change in CMS’ methodology for setting these limits. GAO also found a lack of clarity in how public comments informed CMS’ requirements for monitoring and evaluating waivers. In some instances but not others, CMS responded to concerns raised during the public comment process by adding specific monitoring and evaluation requirements to a waiver’s conditions.

GAO made two recommendations to address the weaknesses it found. First, CMS should “develop and communicate a policy” that defines when changes to waiver applications are substantial enough to require a new review against the transparency requirements, which would effectively treat the proposal as a new submission. CMS responded, the GAO report notes, by stating that it would develop standards for determining when changes are substantial enough to warrant another federal comment period. But this wouldn’t satisfy the GAO recommendation that states solicit public comments before submitting a revised application to CMS.

Second, GAO recommended that CMS apply the same transparency requirements to waiver amendments as to new applications and renewals. CMS responded that it doesn’t intend to fully adopt this recommendation but instead “will review its current processes and develop additional policies and processes, as needed, to enhance the transparency of such applications [amendments].”

Medicaid waivers can have significant — and potentially harmful — impacts on Medicaid beneficiaries, so transparency is vital. CMS should fully adopt GAO’s recommendation and apply transparency requirements consistently to new applications, renewal requests, and waiver amendments.


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