Michigan Financing Arrangements

Pursuant to a congressional request, GAO provided information on Michigan's 1995 Medicaid funding arrangements. GAO noted that: (1) Michigan has been among the most successful states in obtaining additional federal Medicaid funds; (2) since fiscal year (FY) 1991, Michigan has reduced its Medicaid costs by $1.8 billion due to a variety of financing partnerships with medical providers; (3) most federal matching funds paid to providers have been returned to the state, thus reducing state appropriations; (4) although federal legislation has curtailed certain financing practices, Michigan has found new ways to obtain federal matching funds, such as using provider donations to maximize federal funds and reduce state costs; (5) Michigan's use of intergovernmental transfers could reduce Medicaid costs by an additional $428 million in FY 1995; (6) Michigan expects to obtain over $414 million in federal matching funds in FY 1996; (7) Michigan should realize a net benefit of $196.5 million in FY 1995 by adjusting nursing home and mental health Medicaid services payments; and (8) Michigan determined that it could make additional hospital outpatient payments of $40 million without exceeding what Medicare would pay for such services.