U.S. Senate Finance Committee Chairman Chuck Grassley (R-IA) announced last week that he had received a response to a letter he and several members of the Committee wrote to the Department of Health and Human Services (HHS) last summer. He notes that he received “more questions than answers” from the department’s response.
“There are proposals on Capitol Hill to raise the federal matching rate significantly for Puerto Rico, but Congress must have a thorough and serious discussion before enacting such policies,” explained Grassley in his announcement last week. “It’s my goal to provide Medicaid beneficiaries the help they need while holding the government accountable as stewards of the program.”
The letter from Grassley and some colleagues to HHS focused on the inequality of Puerto Rico’s Medicare and Medicaid funding as well as concerns about allegations of corruption and fiscal mismanagement.
The Senate letter pointed out that Congress has provided temporary funding for Medicaid in Puerto Rico without creating any permanent solution to the problem of unequal funding.
“Unfortunately, Medicaid funding cliffs for Puerto Rico have recurred, and no permanent solution has been put in place,” the authors wrote. “Currently, Congress is again considering Medicaid funding for Puerto Rico. We are again confronting proposals for what amounts to another extension of boosted funding with no permanence or certainty and without any resolution of the Medicaid funding cliff.”
They also referred to political upheavals in Puerto Rico and accusations of corruption on the part of government officials, as well as failures in reporting.
The letter concluded with a list of questions. Grassley and his colleagues asked for specific figures on Medicaid spending since 2014, as well as information on oversight programs such as Payment Error Rate Measurement and Medicaid Eligibility Quality Control programs.
Response from CMS
Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS), responded on behalf of HHS.
Verma’s letter explained that emergency disaster relief funding for Medicaid has caused funding for Puerto Rico in recent years to be higher than the 55% federal matching funds normally provided to Puerto Rico up to the territory’s funding cap.
The letter also informed Grassley and his colleagues that Puerto Rico has a special anti-fraud unit for Medicaid, and is therefore exempt from Payment Error Rate Measurement and Medicaid Eligibility Quality Control programs required of the States.
At the same time, Medicaid is working with Puerto Rico toward “more robust, timely, and accurate data” through Medicaid’s Transformed Medicaid Statistical Information System (T-MSIS). The letter specified that Puerto Rico has met the milestones required by this program, which is a work in progress for the agency.
“We are continuing to work with States and Puerto Rico to shift from simply collecting data to using advanced analytics and other innovative solutions to improve data and maximize the potential for program accountability and integrity purposes,” the letter stated.
The real funding match
Grassley expressed dissatisfaction with the response. “The statutory federal matching rate for Puerto Rico is 55 percent. However, the response letter from CMS shows that the effective matching rate is much higher. Letters and conversations with the Puerto Rican government have only mentioned the 55 percent rate,” Grassley said at his website. “If the rate is higher, Congress and taxpayers deserve to know why. Grassley intends to follow up with CMS on this and other issues.”
In fact, the actual matching rate over time is usually lower than 55% because of the funding cap. imposed on Puerto Rico’s Medicaid spending. When Medicaid expenses in the territory reach the funding cap, federal dollars stop. The territory must rely on its own resources until new federal funding is available. This is not the case for States. If their costs increase, their funding also increases.
Administrator Verma’s response noted that due to more recent federal reforms the effective matching rate by Puerto Rico for Medicaid spending was 62.2% in 2014 and slowly but steadily increased to 66.9% in 2017. In 2018, the federal government contributed 91.8% of Puerto Rico’s Medicaid costs.
Puerto Rico doesn’t cover all the health services that are required by states, including nursing home care, home health services, non-emergency medical transportation, and a panoply of children’s health benefits guaranteed under the Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program.
In addition, despite extensive manufacturing of prescription drugs in Puerto Rico, Medicaid recipients in the U.S. territory do not have access to the same range of medications available in the states.
One result of Hurricane Maria and the months-long power outage that followed was that medical facilities in Puerto Rico had to pay for fuel for generators. Add the additional medical needs caused by the hurricane, the power outage, and other results of the hurricane, and it is clear that Puerto Rico’s needs for medical funds were higher than normal. Congress allocated funds for disaster relief which pushed the federal funds provided for Medicaid higher than normal.
Counting those additional funds, the quantity of federal funds provided went above 55% of the territory’s Medicaid costs. The matching rate has not in fact changed, though there is legislation in Congress which intends to increase the matching rate in the U.S. territories to match those in the States. States receive as much as 83% in matching funds, with no cap.
In response to the CMS letter, Chairman Grassley stated that Congress and taxpayers deserve to know why Puerto Rico’s matching rate had effectively changed. He further noted that he intends to follow up with CMS on this and other issues.