Lawmakers Looking to Strengthen Federal Oversight of Medicaid

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By Nathaniel Weixel

Nov. 3 — House lawmakers want to give the CMS more ways to hold states accountable for how they finance the nonfederal share of their Medicaid programs.

At an Energy and Commerce health subcommittee hearing Nov. 3, lawmakers discussed a series of bipartisan bills that are intended to fill gaps in the oversight of state Medicaid programs. The legislation would provide the Centers for Medicare & Medicaid Services with more information about the sources of nonfederal Medicaid funds, as well as how states calculate supplemental payments to hospitals and other providers.

The Government Accountability Office has found the CMS doesn't collect complete and accurate data on the various sources states use to finance the nonfederal share of Medicaid funding. The GAO also has found gaps in CMS oversight of supplemental payments, including who was receiving them and how they were calculated.

In previous reports, the GAO has found that Congress and the CMS have acted to improve transparency and accountability for one type of Medicaid supplemental payment known as disproportionate share hospital (DSH) payments, made for uncompensated care costs experienced by hospitals serving low-income and Medicaid patients. Since 2010, DSH payments are required to be reported to the CMS and are subject to independent audits that assess their appropriateness. States also make other supplemental payments—non-DSH payments—to hospitals and other providers that, for example, serve high-cost Medicaid beneficiaries.

The non-DSH payments are where more work is needed, Katherine Iritani, the GAO's director of health care, testified during the hearing.

Reporting Requirements

The committee bills, specifically H.R. 1362 and H.R. 2151, would require various annual reports from states to fill the current gaps. Those bills work in tandem to increase reporting and auditing requirements on states’ Medicaid payments relating to non-DSH supplemental payments and the non-federal share of state Medicaid spending.

According to Iritani, her agency recommended in 2014 that the CMS improve the data states report on Medicaid financing. The CMS disagreed and stated its efforts were adequate. Iritani said the GAO maintains its recommendation is valid.

While Health Subcommittee Chairman Joe Pitts (R-Pa.) praised the bills for strengthening Medicaid, Rep. Frank Pallone Jr. (D-N.J.), the committee's ranking member, had concerns.

“I agree that transparency in these areas is important to ensure that payments to providers are sufficient in Medicaid. But these bills are duplicative of ongoing CMS initiatives and add a burdensome layer of administrative bureaucracy,” Pallone said in prepared testimony. “We need a more nuanced approach here, and rather than improving our ability to ensure that Medicaid dollars go towards Medicaid beneficiaries, I fear these bills will instead do the very opposite of that.”

Medicare Outpatient Supervision

Another bill under consideration (H.R. 2878) would prohibit, for one year, Medicare contractors' enforcement of supervision requirements for outpatient therapeutic services in critical access and small rural hospitals.

CMS policy requires direct supervision by an appropriate physician or non-physician practitioner in the provision of all therapeutic services to hospital outpatients. “Direct supervision” means the physician or other practitioner has to be immediately available while the service is being provided.

The Senate approved a companion bill (S. 1461) in September (178 HCDR, 9/15/15).

To contact the reporter on this story: Nathaniel Weixel in Washington at

To contact the editor responsible for this story: Brent Bierman at

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