States worried about Medicaid when ARRA funding evaporates

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Although states are now using American Recovery and Reinvestment Act (ARRA) funding to support Medicaid programs, they are worried about sustaining those programs once stimulus money disappears in 2011, according to a new Government Accountability Office (GAO) review of stimulus spending

According to the GAO, as of September 11 of this year the Treasury department had spent $48 billion of the $49 billion projected for use by the states and localities in federal fiscal year 2009. More than three quarters of that funding has, the GAO says, gone for Medicaid Federal Medical Assistance Percentage (FMAP) increases and the State Fiscal Stabilization Fund, which goes to education.

The GAO found that most of the 16 states (as well as the District of Columbia) it studied for purposes of the report were using the added Medicaid funds to cover increased caseloads and maintain current services and eligibility. Several officials from those states, according to the GAO, “expressed concern about the longer term sustainability of their Medicaid programs after the increased FMAP funds are no longer available, beginning in January 2011.”

The report also stated that while funding is giving the states and local jurisdictions some fiscal relief, “accountability and reporting challenges need to be fully addressed.”

States and localities are required to report quarterly—the first reports are due in October—on a number of measures, including the use of funds and estimates on the number of jobs created and retained as a result of ARRA.

“This unprecedented level of detailed information to be reported by a large number of recipients into a new centralized reporting system,” the GAO report states, “raises possible risk for the quality and reliability of these data.”

The GAO report recommends that: the Office of Management and Budget (OMB) provide clearer accountability for recipient financial data;
as well as program-specific examples of recipient reports, outreach to nonfederal recipients, and further guidance on program performance measures; and timely notification of funding provided within a state to key state officials and a master schedule for anticipated new or revised federal agency guidance.