A new report from the U.S. Government Accountability Office (GAO) examines the administrative costs of implementing Medicaid Section 1115 demonstration waivers with work or community engagement requirements.
GAO analyzed estimated administrative costs reported by the first five states that the Centers for Medicare & Medicaid Services (CMS) approved to implement these waivers: Arkansas, Indiana, Kentucky, New Hampshire, and Wisconsin.
The costs associated with these waivers varied from less than $10 million to $250 million. The agency attributes the wide variation to differences among states, such as information technology infrastructure and number of beneficiaries.
In the report, GAO identified areas needing additional CMS oversight and provided three recommendations:
- as part of the waiver approval process, states should be required to submit and make public projected administrative costs associated with implementing work and community engagement requirements;
- CMS should consider the projected costs when determining whether waiver requests meet budget neutrality standards; and
- CMS should ensure that the appropriate federal matching rate is applied to the administrative costs and that only costs permitted by existing CMS guidance receive a federal matching rate.
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