Health Law Daily Policy and data considerations for per-enrollee federal funding
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Monday, September 12, 2016

Policy and data considerations for per-enrollee federal funding

By Harold Bishop, J.D.

Medicaid has been the focus of proposals to limit the federal expenditure commitment. One such approach would limit the amount of the federal Medicaid funding states could receive per enrollee. A Government Accountability Office (GAO) report identifies several key interrelated policy and data considerations that could be useful should policymakers elect to pursue a per-enrollee limit on federal Medicaid funding for states (GAO Report, GAO-16-726, September 9, 2016).

Background. On August 10, 2016, the Chairman of both the Senate Committee on Finance and the House Committee on Energy and Commerce asked the GAO to examine considerations for designing a method to reimburse states on a per enrollee basis for individuals enrolled in Medicaid.

In preparing its report, the GAO: (1) reviewed its prior reports on Medicaid and a range of federal financing topics; (2) conducted a literature review on Medicaid per capita caps; (3) interviewed officials from 10 state Medicaid programs selected to vary in current per-enrollee spending, service delivery methods, and other program characteristics; and (4) held interviews to obtain perspectives of subject matter experts selected on the basis of the literature review.

Policy. The policy considerations discussed in the report include coverage, flexibility, allocation of funds across states over time, accountability, and the potential effects of a per-enrollee limit.The GAO made the following observations:

  • Coverage entails decisions about whether all or a subset of Medicaid populations and spending categories would be financed under a per capita cap.
  • Flexibility would entail balancing the ability of the federal government to prescribe program features, such as coverage of a set of services, with states' ability to choose program design features.
  • Considerations for allocating funds across states would include the extent to which a cap accounts for variation in the health care needs of states' Medicaid populations, geographic cost differences, state fiscal resources, and program design.
  • Efforts to ensure accountability for the receipt of federal funds could include determining what existing, modified, or new mechanisms to use to verify the number and eligibility of enrollees covered by the cap.
  • Considerations would also include the potential effects that changes to Medicaid financing could have on other federally financed sources of health care, broader health care costs, states, and Medicaid enrollees.

Data. The data considerations discussed in the report include the use of CMS enrollee and expenditure data and other available federal sources of data. According to the report, while CMS data could be used to develop estimates of per enrollee Medicaid expenditures, the data have limitations, as not all CMS expenditure data can be easily linked to enrollees and doing so may require complex adjustments.

In addition, the GAO notes that other available federal data sources, such as nationally representative population surveys, could provide estimates of Medicaid enrollee characteristics or other aspects of state funding needs. These data sources, however, would need to be combined with information on expenditures for services to identify the funding amounts needed to support particular program goals.

The GAO sent a draft of the report to HHS, but received no comments.

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