WASHINGTON, DC - Continuing its work to strengthen Medicaid for the nation’s most vulnerable, Energy and Commerce Committee Health Subcommittee Chairman Joseph Pitts (R-PA) and Health Subcommittee Vice Chairman Brett Guthrie (R-KY) today pressed Andy Slavitt, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), on the agency’s oversight. Specifically, the leaders are seeking to better understand the agency’s oversight of states’ use of provider taxes to finance the non-federal share of program expenditures. Committee leaders are concerned that lax oversight and incomplete data may be allowing states to shift some of the financial burden of financing Medicaid back to the federal government, draining valuable resources.
Under current law, states are allowed to tax health care providers like hospitals, doctors, and nursing homes, and then spend funds raised from those taxes on their Medicaid programs. Because states receive matching dollars from the federal government for the Medicaid program, it is in states’ financial interest to utilize these funds to draw down additional federal dollars to spend in their Medicaid program.
“On July 25, 2014, CMS sent a letter to state Medicaid directors and health officials providing guidance on the use of provider taxes," note Pitts and Guthrie. They also cited a July 2014 Government Accountability Office report in the letter to CMS, writing, “that while states are increasingly relying on funds from providers to finance the nonfederal share of Medicaid, CMS has not ensured the data on state Medicaid financing are accurate and complete. GAO found that without accurate and complete data, it is difficult for CMS to ensure that states are complying with current limits and requirements. Additionally, GAO has long raised concerns that states may be using financing schemes, including provider taxes, to increase state Medicaid expenditures in order to draw down additional federal matching funds while simultaneously lowering the state’s share of the costs."
The leaders continued, “GAO found that without accurate and complete data, it is difficult for CMS to ensure that states are complying with current limits and requirements. Additionally, GAO has long raised concerns that states may be using financing schemes, including provider taxes, to increase state Medicaid expenditures in order to draw down additional federal matching funds while simultaneously lowering the state’s share of the costs."
Additionally, the July 2014 letter from CMS echoes many of these same concerns, saying, “CMS understands that some states may have continued to tax only Medicaid MCO services by incorporating only Medicaid MCOs into larger (often existing) state and local taxes. … CMS is concerned that such taxes are not consistent with applicable statutory and regulatory requirements because they target Medicaid providers and treat such providers differently for purposes of the tax from other individuals or entities. We are also concerned because this targeting is directly related to the underlying health care items or services."
Given the concerns raised by CMS and GAO, Pitts and Guthrie have requested answers to six questions about CMS’ use of provider taxes within 30 days.
Read the full letter online here. Related Items
* Letter to CMS Regarding Oversight of States’ Use of Provider Taxes
