GAO urges better guidance in FEMA public assistance, Medicaid procurement in PR

By The Star Staff

The U.S. Government Accountability Office (GAO) issued two reports late last week, one of which urged the Federal Emergency Management Agency (FEMA) to revise its cost estimating guidance for public assistance for Puerto Rico to more fully adhere to best practices, and another that urged the Centers for Medicare & Medicaid Services (CMS) to enhance its supervisory role over Puerto Rico’s procurement process.

Both reports were released Friday.

Regarding FEMA’s Public Assistance Program, the GAO report noted that as of Sept. 30, 2019, the agency had obligated nearly $6 billion in Public Assistance grants to Puerto Rico for 1,558 projects since the September 2017 hurricanes. Of this $6 billion, $5.1 billion was obligated for emergency work projects such as debris removal and temporary power restoration.

“However, FEMA and Puerto Rico faced challenges in developing long-term, permanent work projects under the Public Assistance program. The large number of damaged sites and delays in establishing cost estimation guidance specific to Puerto Rico have also presented challenges to developing projects,” the report states. “Both parties must agree to fixed cost estimates for these projects before work can begin.”

FEMA and Puerto Rico had approved fixed cost estimates for 19 projects as of September 2019, out of 9,344 damaged sites in Puerto Rico, such as schools, hospitals and roads. FEMA and Puerto Rico have recently taken actions, including extending the deadline for fixed cost estimates, to address these challenges.

However, it is too soon to assess the impact of these actions, the report says.

FEMA has adapted its Public Assistance cost estimating guidance to accurately reflect costs in Puerto Rico but could improve the guidance to further enhance its reliability, the report said. GAO found that FEMA’s guidance substantially or fully met best practices for nine of 12 steps included in the GAO Cost Estimating and Assessment Guide, such as documenting and defining the purpose of the estimate. However, FEMA could improve the guidance in three areas, including analyzing risks and future uncertainties that could affect these estimates, the report states.

FEMA has developed Public Assistance policies and guidance to respond to complex recovery conditions in Puerto Rico.

“However, Puerto Rico government officials GAO spoke with stated that they were not always certain about how to proceed in accordance with FEMA policy because they did not consistently understand what guidance was in effect,” the report said. “Further, FEMA does not maintain a repository of Public Assistance guidance available to all recovery partners that includes current applicable guidance. Without real time access to current applicable guidance, recovery partners risk using guidance that has been revised or replaced.”

GAO recommended that FEMA revise its cost estimating guidance for Public Assistance to more fully adhere to best practices, and that it develop a repository of current applicable Public Assistance guidance available to all relevant recovery partners in Puerto Rico.

Regarding the health study performed by GAO, the agency found that Puerto Rico implements major functions of its Medicaid program by procuring services from contractors, such as the delivery of managed care services to Medicaid beneficiaries. In 2018, procurement costs represented $2.4 billion of Puerto Rico’s $2.5 billion in total Medicaid expenditures. A 2019 federal indictment alleging Puerto Rico officials unlawfully steered Medicaid contracts to certain individuals has raised concerns about Puerto Rico’s Medicaid procurement process, including whether this process helps ensure appropriate competition.

CMS is responsible for overseeing the Medicaid program, requiring states and territories to use the same process for Medicaid procurements as they do for their non-federal procurements. However, “CMS has not taken steps to ensure Puerto Rico has met this requirement,” GAO said.

“Instead, CMS has relied on Puerto Rico to oversee the territory’s procurement process and to attest to its compliance,” the second report said. “CMS approved Puerto Rico’s attestation of compliance in 2004 and has not required subsequent updates.”

GAO recommends that CMS implement risk-based oversight of the Medicaid procurement process in Puerto Rico.

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