From the U.S. Government Accountability Office, www.gao.gov Transcript for: Comptroller General Testifies to U.S. Senate on Medicaid Program Risks Description: In his August 21, 2018 testimony to the U.S. Senate, Comptroller General Gene Dodaro discusses Medicaid program risks. Related GAO Work: GAO-18-687T: Medicaid: CMS Has Taken Steps to Address Program Risks but Further Actions Needed to Strengthen Program Integrity Released: August 2018 [ Opening Screen ] Senate Committee on Homeland Security and Governmental Affairs [ Second Screen ] Medicaid: CMS Has Taken Steps to Address Program Risks but Further Actions Needed to Strengthen Program Integrity [ Third Screen ] Opening Statement by Comptroller General Gene L. Dodaro August 21, 2018 >> Thank you very much, Mr. Chairman, ranking members, Senator McCaskill, members of the committee. I'm very pleased to be here today to talk about the Medicaid program, the risks that we've identified, the steps CMS is taking to address those risks, and additional actions we believe are necessary in order to ensure the integrity of the Medicaid program going forward. There are three areas that I want to cover briefly in my opening remarks. First are these demonstrations. Now demonstrations allow CMS to give states flexibility to spend money that normally would not be covered under the federal matching requirements. One-third of total Medicaid spending now is under these demonstration projects, which have been approved in three-quarters of the states. Now, our concerns about this have been that many of these demonstration projects were formed on questionable payment decisions and are leading to more spending on Medicaid than would normally be under the original program constraints and the evaluations that are done as to whether or not the demonstrations are proving to lead to policy options in the future have had some limitations. CMS has taken some action in this area. I'm very pleased that they are now limiting the amount of spending limit that could be accrued under these demonstrations and carried over to the next year. That one change alone has saved $100 billion in federal and state Medicaid money from 2016 to 2018 according to CMS's estimates. We think additional steps that CMS is planning to take to better ensure the budget neutrality of these demonstrations and we also believe that there needs to be more efforts made to make sure the evaluations are reasonable, timely, and lead to information that can help inform policy decision-making going forward. So I'm pleased they're taking action, but more action is needed in this area. Second are supplemental payments. These are payments that are made over and above reimbursement of claims for Medicaid or encounters under the managed care portion. In fiscal '17, that was $48 billion. We have raised concerns in the past about the need for more accurate and complete reporting on states' funds used to meet their own match, and without this information, there's the possibility that the states could be shifting cost to the federal government without even CMS knowing about it. Secondly, these payments, particularly the non-disproportionate healthcare payments are supposed to be made to ensure that they're economical and efficient, and we believe there needs to be better criteria for that, and it needs to be well articulated going forward. And in these supplemental payments, there's also a need to make sure that there's proper focus and attention. I know CMS is coming up with guidance or planning some policy guidance to be issued next year--we're hoping that this policy guidance will address the recommendations that we've had in these areas. And the last area that needs to be addressed is to make sure that the payments are clearly tied to Medicare spending as opposed to local sources of funding in these areas. What we found in the past is that in some cases the supplemental payments were given to local providers who provided a lot of share to help the state meet their match and not necessarily because they had the highest level of uncompensated care for Medicaid recipients. So this is important to clarify and ensure payment integrity. Last is the audits that need to be done. Ms. Verma mentioned audits they're planning to put in place. These are very important. I'm glad they're resuming after a four-year hiatus. The beneficiary eligibility determinations --the managed care is my big concern. Of the $36-$37 billion in improper payments, most of that is in the fee for service and beneficiary eligibility determination. Only $500 million is in managed care. Managed care has grown over the years without a lot of good payment integrity and oversight processes in place. CMS is planning to start that, but I think state auditors are a tremendously untapped resource. Two state auditors with us today have volunteered, on their own, to come to this hearing. Beth Wood, the auditor general from North Carolina on my left right here. She's also the president of the State Auditors' Association. Daryl Purpera, the state auditor from Louisiana is with her. He'll be the next president taking over that association for state auditors. But with Medicaid expenses expected to continue to rise rather dramatically--it's one of the fastest growing programs in the federal government--we can't afford to have the state auditors on the sidelines here. They need to get in the game. They need to have a substantive and ongoing role, and I think it'll pay huge dividends. Administrator Verma and us and our team have had conversations on this, and all our recommendations and pleas, we're having a very constructive dialogue on these issues. This afternoon, our team will be meeting with the state auditors to hopefully start a dialogue that'll lead to a very good role for them. So I'm very pleased to be here today. This is a very important program for the American people, and we need to do everything we can to ensure the integrity of it and its survival in the future. Thank you very much, Mr. Chairman. >> Thank you Gene Dodaro.