Upton, Hatch ask CMS about rising costs of newly eligible adults on Medicaid

U.S. Rep. Fred Upton (R-MI), chairman of the Energy and Commerce Committee, and U.S. Sen. Orrin Hatch (R-UT), chairman of the Finance Committee, sent a letter to  Centers for Medicare and Medicaid Services’ (CMS) acting Administrator Andy Slavitt on Tuesday to express their concerns with the costs of newly eligible adults on Medicaid.

Based on the CMS Office of the Actuary, expenditures for these newly eligible adults are nearly 20 percent higher than other eligible adults.

“While the increase in estimated costs for the newly eligible may be explained by incorrect assumptions in the original modeling, the double-digit increase in costs is potentially concerning,” Upton and Hatch said in the letter. “Under the current matching rate, states effectively lack economic incentives to be prudent purchasers for the newly eligible population because the federal government pays 100 percent of the cost of care for this population. Under current law, the lack of incentive is only slightly diminished over time since the federal government is still on track to pay for at least 90 percent of the costs associated with this population for the foreseeable future.”

Upton and Hatch are seeking to learn what steps CMS took to ensure that 2014 capitation rates for the newly eligible adults were appropriate. Also, they are asking how CMS ensured that states were not shifting costs to the federal government by making generous assumptions and setting higher payment rates for newly eligible adults while offering lower rates for other eligible adults.

Upton and Hatch have requested that the CMS respond to their concerns within 45 days.