July 14,2006

Grassley asks states for information about use of contingency-fee Medicaid consultants

Chairman continues work to improve financial management of vital program

WASHINGTON — Sen. Chuck Grassley is asking governors nationwide to provide information about their states’ use of private contractors to develop initiatives that increase the federal Medicaid dollars collected by the states.

Grassley’s questions follow a Senate hearing he conducted in June to review Medicaid spending, during which the Government Accountability Office (GAO) reported that two-thirds of the states use such consultants to help them get more federal Medicaid money. The report said,“A growing number of states are using consultants on a contingency-fee basis to maximizefederal Medicaid reimbursements. As of 2004, 34 states – up from 10 states in 2002 – usedcontingency consultants for this purpose.”

The GAO report also said that “a lack of oversight and clear guidance from the Centersfor Medicare and Medicaid Services has allowed states to develop new financing methods thatgenerate additional federal costs.” Grassley said that both Congress and federal Medicaidofficials had an obligation “to establish clear-cut ground rules and make sure they’re followedwhen it comes to the use of contingency-fee consultants.”

In letters sent today to 50 governors and the District of Columbia, Grassley asked fordetailed information about how states are using Medicaid consultants and how additionalMedicaid dollars raised through such efforts are spent. He also asked each state to describe itsmechanisms for recovering payments for services and products that should be covered by a thirdparty, rather than Medicaid, which is to be the payer of last resort.

As chairman of the Committee on Finance, Grassley is working with other lawmakers and the nation’s governors to enact common-sense reforms to the federal-state Medicaid program, which provides health insurance for low-income families, uninsured children,individuals with disabilities, and the frail elderly. He also has been investigating the pricingpractices of drug companies who bill Medicaid for prescription medicines as part of the effort toimprove the program’s finances and protect the payment system from abuse.

“Medicaid spending is increasing faster than current budget limitations can afford,”Grassley said. “That’s why I’m working to find ways to capture savings that will allow us to reinin growth and still expand eligibility to those most in need.”