The Centers for Medicare and Medicaid Services' Medicaid waivers process has transparency "weaknesses," which may cause the agency to approve waivers without understanding how they impact beneficiaries and federal spending, according to a report from the Government Accountability Office.

The government watchdog found that "significant gaps" in transparency have impacted the agency's evaluation process for section 1115 demonstrations, Medicaid waivers that allow states to adapt their Medicaid program. The GAO determined that CMS approved waivers that make "major changes" to states' Medicaid programs without obtaining state-level public comments or requiring information on how the changes would impact Medicaid beneficiaries.

"These gaps may leave the agency and the public without key information to fully understand the potential impact of the changes being proposed, including on beneficiaries and costs," the reports states. "These risks take on increased importance given that CMS is encouraging states to use the flexibility provided under demonstrations to test changes to their Medicaid programs that could have significant effects for beneficiaries and other stakeholders."

The GAO, a government agency that conducts audits and investigations for Congress, recommended that CMS develop new policies to address the issues outlined in the May 17 report. The U.S. Department of Health and Human Services agreed with the findings, according to the report.

A spokesperson for CMS said in a statement that the agency supports a transparent review of the waiver application process and that the process is meant to include public input. CMS still defends its efforts to provide states with program flexibility through the waiver process, according to the statement.

Medicaid is the dual state and federally run health insurance program for low-income Americans. As Medicaid operates at both the state and federal level, states can adapt their program through waivers approved by HHS and CMS. However, any experimental or demonstration project must uphold the principles of Medicaid, including the expansion of eligibility and improved care.

As of November 2018, over 75% of states are operating section 1115 demonstrations, according to the GAO. The report also states that the federal government spent about $108 billion on demonstrations in 2016, which is about one-third of Medicaid program spending.

CMS has been criticized for approving Medicaid work requirement waivers without a proper understanding of their impact. Medicaid work requirements mandate that recipients work a set number of hours each month in exchange for Medicaid eligibility.

The report specifically highlighted the agency's approval of the controversial policies as an area of concern.