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HEHS-95-146R 1 (1995-05-05)

handle is hein.gao/gaobackus0001 and id is 1 raw text is: United States GAO General Accounting Office Washington, D.C. 20548 Health, Education and Human Services Division B-261269 May 5, 1995 The Honorable John R. Kasich Chairman, Committee on the Budget House of Representatives Dear Mr. Chairman: We detailed how certain financial arrangements enabled Michigan, Tennessee, and Texas to obtain about $800 million in federal Medicaid funds without effectively committing their share of state matching funds in a 1994 report.1 While federal legislation has restricted certain state financing arrangements, some provisions did not take effect until after we finished field work in the three states for that report. Your Committee's recent hearings2 on Medicaid spending growth again raised concerns about these state spending practices. As a result, you requested that we update certain information from our 1994 report to determine what financing arrangements states were using in fiscal year 1995 to obtain federal Medicaid funds. Because Michigan used several approaches to obtain federal matching funds and was part of our prior review, we agreed with your staff to focus our information update on Michigan's 1995 financing arrangements. To identify Michigan's current financing arrangements, we obtained documentation and met with Michigan Department of Management and Budget, state Medicaid, and regional Health Care Financing Administration (HCFA) officials. Michigan's financing arrangements are not unique because other studies have shown that many states also have special financing arrangements to obtain federal matching funds. 'Medicaid: States Use Illusory Approaches to Shift Program Costs to Federal Government (GAO/HEHS-94-133, Aug. 1, 1994). 2At these April 4, 1995, hearings, we testified on Medicaid spending pressures. See Medicaid: Spending Pressures Drive States Toward Program Reinvention (GAO/T-HEHS-95- 129, Apr. 4, 1995). GAO/HEHS-95-146R Michigan Financing Arrangements 5'z

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