GAO: Medicaid demonstration project costs not justified

A new report to Congress says more justification is needed for the $146 billion being spent on demonstration projects, most of which have not been clearly shown to further the objectives of the Medicaid program. Medicaid funds more than two-thirds of U.S. nursing home care.

Even though the Department of Health & Human Services has approved “expenditure authorities” to allow such expanded coverage under so-called “Section 1115” demonstration projects, it has failed to issue specific criteria for making these determinations, the Government Accountability Office concluded in its report, released last week.

For example, the department approved expenditures authorizing five states to spend $9.5 billion in Medicaid funding to support about 150 programs that would not otherwise have been eligible for federal Medicaid funding. Some of the expenditures HHS authorized were for programs already receiving other types of non-Medicaid funding, the GAO reported.

HHS also allowed eight states to spend more than $26 billion for new types of supplemental payments to hospitals and other providers through capped funding pools for a range of purposes, according to the report.