Senators Call for Guidance on Federal Funds for State-Run Exchanges

On Monday, two Republican senators in a letter to CMS called on the department to issue guidance on how state-operated exchanges can spend federal funds, The Hill reports (Sullivan, The Hill, 5/4).

Background

The senators' letter comes after an HHS Office of Inspector General report released last week found that some state-operated exchanges might be illegally using federal funds allowed for design, development and implementation of the exchanges  to cover operational expenses.

Sixteen states and Washington, D.C., have set up their own exchanges under the Affordable Care Act. They have received about $4.2 billion in exchange grants from the federal government, according to Kaiser Family Foundation data.

State-operated ACA exchanges were given until Jan. 1, 2015, to become self-sustaining. Federal funding for such exchanges ended at the beginning of the year, leaving states with a requirement to cover their operating costs. Many states have faced challenges finding funding sources (California Healthline, 5/4).

In its report, OIG criticized CMS, saying it had not provided adequate guidance about what is considered "operational costs." For example, OIG noted that it is unclear whether federal funding could go toward printing and postage costs and bank fees for Washington state's exchange (California Healthline, 4/30).

Details of Letter

In the letter, Sens. Chuck Grassley (R-Iowa) and Orrin Hatch (R-Utah) wrote that state-operated exchanges "cannot be allowed to use hard-earned taxpayer dollars for expenses that are statutorily prohibited." They added the using federal funds for operational costs was only "a short-term fix that delays the time before structural defects have to be addressed."

Reaction

HHS spokesperson Meaghan Smith said CMS would "soon" issue formal guidance on the use of federal funds for state-operated exchanges. She added that the OIG report was "preliminary" and that "should CMS find any misspent funds after review, [the department] will use remedies available under the law and regulations to recover any such funds" (The Hill, 5/4).