Audit critique and evaluation methods

Public Administration

Audit Critique

In an investigative audit the GAO was asked to provide information on supplemental Medicaid payments made by states. GAO designated Medicaid a high-risk program because of anxieties about its size, growth, and insufficient fiscal oversight. The program cost the federal government and states almost four hundred billion in fiscal year 2010. In addition to normal Medicaid payments to providers, states make supplemental payments, including DSH payments, which are intended to counterbalance the uncompensated costs of care provided to uninsured people and Medicaid beneficiaries. States also make other supplemental payments, which are known as non-DSH supplemental payments, to hospitals and other providers, in order to help offset the costs of care provided to Medicaid beneficiaries. GAO, along with others have raised concerns about the transparency of states' Medicaid supplemental payment. The purpose of this audit was to investigate the transparency of these payments (Medicaid - States Reported Billions More in Supplemental Payments in Recent Years, 2012).

The method used in this audit was an examination of Medicaid supplemental payment data from the standardized expenditure reports submitted by states to CMS on a quarterly basis using form CMS-64. States have 30 days after the end of a quarter to submit this form and must certify that the data are correct to the best of their knowledge. CMS reviews these reports and works with states to resolve any questions before certifying them as final. CMS transfers the certified, finalized data into a Financial Management Report (FMR) and makes annual data available on its website. CMS allows states to make adjustments to their prior CMS-64 submissions for up to 2 years. The annual FMR incorporates adjustments reported by the states by applying reported adjustments to the fiscal year during which they are reported, even if an adjustment corrects expenditures reported during an earlier fiscal year (Medicaid - States Reported Billions More in Supplemental Payments in Recent Years, 2012).

The data CMS finalized for fiscal year 2010 showed that states and the federal government spent over thirty billion for DSH and non-DSH supplemental payments during fiscal year 2010, with the federal share of these payments totaling almost twenty billion. States reported over seventeen billion in DSH payments and just over fourteen billion in non-DSH supplemental payments during fiscal year 2010, but state reporting of non-DSH supplemental payments separately from regular payments was incomplete, so the exact amount of non-DSH supplemental payments is unknown. There were no formal recommendations made in this report but there was an observation made that ongoing federal efforts to improve the completeness of reporting of Medicaid supplemental payments is important for effective oversight and to better understand their role in financing Medicaid services.

The overt goal of this report was for the GOA to provide information on the transparency of supplemental Medicaid payments that are made by states. They accomplished this goal in the fact that they could not truly determine the amount of the total Medicaid payments made by the states since state reporting of non-DSH supplemental payments separately from regular payments was incomplete. The methods that were used to do this report were appropriate but the data that was wanted was simply not there.