December 03,2015

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Aaron Fobes, Julia Lawless (202)224-4515

Hatch, Grassley Seek Accounting of Recovery of Misused State Health Care Exchange Funds

WASHINGTON – Sen. Orrin Hatch of Utah and Sen. Chuck Grassley of Iowa are asking the Centers for Medicare and Medicaid Services (CMS) to account for how much federal money it has given to each state health care exchange, how much money it has identified as misused, what it can do to recover money for unallowable activities, and how much money for unallowable activities it has recovered.

     “Given the continuing failure of SBMs (state-based marketplaces or exchanges) and the use of taxpayer funds for unallowable activities, CMS has an elevated responsibility to ensure that any future funding to SBMs is appropriate and that SBMs fulfill all grant terms and conditions,” Grassley and Hatch wrote to CMS Acting Administrator Andrew Slavitt.  “With the ongoing risk that more SBMs will shut down or partially transition to the federal IT structure, and the continuing threat that SBMs will use taxpayer funds for unallowable activities, it is imperative to determine the full cost to the taxpayer of the failures thus far, and what funds the federal government has been able to recover.” 

     Grassley and Hatch described the failure of Maryland’s exchange as an example of a murky outcome for federal taxpayers.  As a result of a lawsuit, the Maryland exchange’s prime contractor settled with the state for $45 million.  That amount appears to contain federal funds, since the federal government provided $179 million to create the Maryland exchange.  Grassley and Hatch said Slavitt wrote in a prior response that CMS is working with the Maryland SBM so that funds are returned to the Treasury.  The senators wrote, “but it is not clear what specifically the federal government is doing to recoup these federal monies.” 

     The Grassley-Hatch letter to Slavitt is available here.  Their prior letter to Slavitt is available here.  Slavitt’s response to the prior letter is available here

     Hatch is chairman and Grassley is former chairman and a senior member of the Finance Committee, with jurisdiction over federal health care programs.