EXCLUSIVE — The Centers for Medicare and Medicaid Services announced that it will no longer give states federal dollars to fund portions of their Medicaid programs that have nothing to do with providing health services to low-income Americans, such as internet services and housekeeping.
The powerful agency that oversees the Medicaid program sent a letter to states on Thursday that it no longer intends to approve or renew requests for federal matching funds that are not directly linked to healthcare expenditures.
“Mounting expenditures, such as covering housekeeping for individuals who are not eligible for Medicaid or high-speed internet for rural healthcare providers, distracts from the core mission of Medicaid, and in some instances, serves as an overly-creative financing mechanism to skirt state budget responsibilities,” reads the announcement obtained by the Washington Examiner about the policy decision.
Medicaid, which provides health insurance coverage to about 79 million Americans, is funded by both the state and federal governments. Each state’s Medicaid program is slightly different, and states are able to go to the federal government for approval to tweak their program to fit their populations’ unique needs.
But Thursday, CMS said that it will not approve new waivers or renew existing ones to receive federal funding for certain state programs that were only sanctioned under “creative interpretations” of federal Medicaid statutes.
Among the examples of this creative spending highlighted by the agency include $20 million for high-speed internet for rural healthcare providers in North Carolina and $241 million for a program in New York for non-medical in-home services, such as housekeeping.
The press release also cited a Medicaid-funded program in New York “to train a diverse medical workforce” to the tune of $3.8 million.
A CMS spokesperson clarified that states can continue to use their own Medicaid funds for these types of non-healthcare services, but these types of services will no longer be eligible for federal matching funds.
According to CMS, these types of programs accounted for roughly $886 million in the federal Medicaid budget in 2019 but that has since increased to $2.7 billion, “representing increasing costs to the federal government without a sustainable state contribution.”
Medicaid is one of the largest areas of expenditure in the federal budget, costing $584 billion in federal dollars alone in 2024.
Republicans looking to pass a massive fiscal overhaul are considering changes to reduce spending by Medicaid.
Earlier this year, the House passed a budget resolution that calls for a $880 billion reduction in spending under the jurisdiction of the Energy and Commerce Committee, which policy experts say signals significant cuts to Medicaid.
The House passed its version of the budget resolution Thursday. Now, the Senate and House must write specific legislation that Republicans hope to pass through budget reconciliation, a legislative process that allows for bills to bypass the filibuster and pass with only a simple majority in the Senate.
House Speaker Mike Johnson (R-LA) has said previously that the goal is to “carve out the fraud, waste, and abuse and find efficiencies” in Medicaid and other social safety net programs. Centrist Republicans, though, have said they will oppose Medicaid cuts.
Various policies being discussed to reform federal Medicaid spending, including work requirements for able-bodied adults on the program as well as changing federal matching rates.
CMS Administrator Dr. Mehmet Oz said during his Senate confirmation hearing that he cherishes the Medicaid program, having worked extensively with Medicaid patients during his tenure at Columbia University’s medical center.
“The way you protect Medicaid is by making sure that it’s viable at every level,” said Oz last month.
