United States Government Accountability Office

GAO Report to Congressional Committees

HURRICANE 

KATRINA 

Allocation and Use of 

$2 Billion for Medicaid 

and Other Health Care 

Needs 

February 2007 

 

GAO-07-67 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 2007

HURRICANE KATRINA

Allocation and Use of $2 Billion for 

Highlights of GAO-07-67, a report to Medicaid and Other Health Care Needs 

congressional committees 

In February 2006, the Deficit

Reduction Act of 2005 (DRA) 

appropriated $2 billion for certain 

health care costs related to 

Hurricane Katrina through 

Medicaid and the State Children’s 

Health Insurance Program

(SCHIP). The Centers for Medicare

& Medicaid Services (CMS) was 

charged with allocating the

$2 billion in funding to states 

directly affected by the hurricane

or that hosted evacuees. 

GAO performed this work under 

the Comptroller General's statutory 

authority to conduct evaluations on 

his own initiative. In this report, 

GAO examined: (1) how CMS 

allocated the DRA funds to states, 

(2) the extent to which states have

used DRA funds, and (3) whether

selected states—Alabama, 

Louisiana, Mississippi, and Texas—

anticipate the need for additional

funds after DRA funds are

expended. To conduct this review, 

GAO reviewed CMS’s allocations of

DRA funds to all eligible states, 

focusing in particular on the four

selected states that had the highest 

initial allocation (released by CMS 

on March 29, 2006). GAO obtained

data from Medicaid offices in the 

four selected states regarding their 

experiences enrolling individuals, 

providing services, and submitting

claims; collected state Medicaid 

enrollment data; and analyzed DRA 

expenditure data that states

submitted to CMS. 

As of September 30, 2006, CMS allocated $1.9 billion of the $2 billion in DRA 

funding to states. CMS allocated funds to: Category I—the nonfederal share 

of expenditures for time-limited Medicaid and SCHIP services for eligible

individuals affected by the hurricane (32 states); Category II—expenditures 

for time-limited uncompensated care services for individuals without a 

method of payment or insurance (8 of the 32 states); and Category III—the 

nonfederal share of expenditures for existing Medicaid and SCHIP 

beneficiaries (Alabama, Louisiana, and Mississippi). CMS did not allocate 

funds to Category IV—for restoration of access to health care. After CMS 

reconciles states’ expenditures with allocations, it will determine how to 

allocate the unallocated $136 million and unexpended funds from the 

$1.9 billion allocated to states. 

Allocation of DRA Funds to States, as of September 30, 2006

DRA allocations (in thousands)

a

State Category I Category II Category III Total Percentage 

Alabama $2,377 $4,660 $241,144 $248,181 13.3

Louisiana 24 132,091 699,529 831,644 44.6

Mississippi 1,816 75,265 518,483 595,563 32.0

Texas 76,872 65,336 b 142,208 7.6

Subtotal 81,088 277,352 1,459,155 1,817,596 97.5

Remaining states 21,315 25,002 b 46,317 2.5

Total $102,404 $302,354 $1,459,155 $1,863,913 100.0

Source: GAO analysis of CMS data. 

Note: This table accounts for the DRA funds allocated to states as of September 30, 2006. 

a

CMS did not allocate funds to Category IV, restoring access to health care.

b

Texas and the remaining states were not eligible for funding from this category.

Of the $1.9 billion in allocated DRA funds, almost two-thirds of the 32 states

that received these funds submitted claims totaling about $1 billion as of 

October 2, 2006. Claims from Alabama, Louisiana, and Mississippi for 

Category III accounted for about 85 percent of all claims filed. These initial 

results are likely to change as states continue to file claims for services. 

Of the four selected states, Louisiana and Texas raised concerns about their 

ability to meet future health care needs once the DRA funds are expended. 

Louisiana’s concerns involved managing its Medicaid program across state 

borders as those who left the state remain eligible for the program. Texas 

was significantly affected by the number of evacuees seeking services, thus 

raising concerns among state officials about the state’s future funding needs. 

CMS, Alabama, Louisiana, and Texas commented on a draft of this report. 

CMS suggested the report clarify the DRA funding categories, reallocation 

process, and communication strategy with states, especially Louisiana. 

Louisiana and Texas commented on their ongoing challenges, and Alabama 

provided technical comments. The report was revised as appropriate. 

www.gao.gov/cgi-bin/getrpt?GAO-07-67.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Kathryn G. 

Allen (202) 512-7118 or allenk@gao.gov. 
Contents 

Letter 1

Results in Brief 5 

Background 7

CMS Allocated DRA Funds to Three Funding Categories 12 

States Have Submitted Claims for About Half of Total DRA 

Allocations 17

Louisiana and Texas Raised Concerns Regarding Future Funding 

Needs 23

Agency and State Comments and Our Evaluation 30 

Appendix I Deficit Reduction Act of 2005 Allocations to 32 

States 35 

Appendix II Comments from the Centers for Medicare & 

Medicaid Services 38 

Appendix III Comments from the State of Louisiana Department 

of Health and Hospitals 43 

Appendix IV Comments from the State of Texas Health and 

Human Services Commission 48 

Appendix V GAO Contact and Staff Acknowledgments 50 

Related GAO Products 51 

Tables 

Table 1: CMS’s Simplified Eligibility Groups for Demonstration 

Projects for Time-Limited Medicaid and SCHIP Services 9 

Table 2: DRA Funding Characteristics and Categories 10 

Page i GAO-07-67 Hurricane Katrina and Medicaid
Table 3: CMS’s Allocation of DRA Funds to States Based on States’ 

Estimated Expenditures, as of September 30, 2006 15 

Table 4: Selected States’ Initial and Updated Estimated 

Expenditures and CMS’s Initial and Updated Allocations, 

as of September 30, 2006 17 

Table 5: CMS Allocation of DRA funds and States’ Claims 

Submitted for Reimbursement, by State, as of October 2, 

2006 18 

Table 6: CMS Allocation of DRA Funds and States’ Claims 

Submitted, by Time-limited Funding Categories, as of 

October 2, 2006 20 

Table 7: Claims Submitted for the Nonfederal Share of 

Expenditures for Existing Medicaid and SCHIP 

Beneficiaries (Category III), as of October 2, 2006 21 

Table 8: Percentages of Submitted Claims for Top Four Medicaid 

Services in Each Selected State, as of October 2, 2006 23 

Table 9: Selected States’ Monthly Enrollment in Category I, Timelimited Medicaid Services 28 

Table 10: CMS’s Allocation of DRA Funds to States, Based on

States’ Estimated Expenditures, as of September 30, 2006 36 

Figures 

Figure 1: Affected Counties or Parishes in Louisiana, Mississippi, 

and Alabama 12 

Figure 2: Percentage of $1.9 Billion DRA Allocation by Funding 

Category, as of September 30, 2006 14 

Figure 3: Texas Monthly Enrollment for Its Traditional Medicaid 

Program and DRA Categories I and II, July 2005-June 2006 29 

Page ii GAO-07-67 Hurricane Katrina and Medicaid
Abbreviations 

CMS Centers for Medicare & Medicaid Services 

DRA Deficit Reduction Act of 2005 

FPL Federal Poverty Level 

HHS Health and Human Services 

MBES Medicaid Budget and Expenditure System 

SCHIP State Children’s Health Insurance Program 

SSA Social Security Act 

SSI Supplemental Security Income 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page iii GAO-07-67 Hurricane Katrina and Medicaid
United States Government Accountability Office

Washington, DC 20548 

February 28, 2007 

Congressional Committees 

Hurricane Katrina, which made landfall along the Gulf coast of Louisiana 

and Mississippi on August 29, 2005, was one of the largest natural disasters 

in our nation’s history, disrupting the lives of hundreds of thousands of 

individuals who suddenly lacked housing and access to basic health care 

services. The states most directly affected by the hurricane—Alabama, 

Louisiana, and Mississippi

1

—were among the poorest areas in the United

States, even before Hurricane Katrina hit. Compared to the rest of the 

United States, higher proportions of the nonelderly populations in these 

directly affected states were enrolled in Medicaid, a program jointly 

financed by the federal government and states to provide health care 

coverage to certain categories of low-income individuals. The devastation 

caused by Hurricane Katrina compounded the health care needs of these 

communities, increasing the numbers of eligible beneficiaries for Medicaid 

and adding large numbers of uninsured individuals. Additionally, 

individuals displaced from their homes and jobs evacuated their home 

states and moved to other states, such as Texas, which strained these 

states’ health care resources. 

During the first 3 weeks after the hurricane, the Centers for Medicare & 

Medicaid Services (CMS), which oversees the Medicaid program, 

announced that states could apply for demonstration projects—to be 

approved by CMS—through which the federal government would fund its 

share of expenditures for health care services for certain individuals 

affected by the hurricane.

2

 CMS identified two categories of services 

covered under these demonstration projects, both of which were subject 

to time limitations. The first category allowed individuals affected by the 

hurricane and eligible under an approved demonstration project to receive

benefits under Medicaid or the State Children’s Health Insurance Program 

 1

Throughout this report, we refer to these three states—Alabama, Louisiana, and 

Mississippi—as the “directly affected” states. 

2

Under section 1115 of the Social Security Act (SSA), the Secretary of Health and Human 

Services (HHS) may waive certain Medicaid requirements and authorize certain Medicaid 

expenditures in order to demonstrate approaches that are likely to promote Medicaid 

program objectives. See SSA § 1115 (codified at 42 U.S.C. § 1315). HHS has delegated the

administration of these demonstration projects to CMS. 

Page 1 GAO-07-67 Hurricane Katrina and Medicaid
(SCHIP) for up to 5 months.3

 The second category, known as 

uncompensated care, allowed states to reimburse providers rendering 

services from August 24, 2005, through January 31, 2006, to individuals 

affected by the hurricane who had no other method of payment or 

insurance.4

 In February 2006, the Deficit Reduction Act of 2005 (DRA) 

appropriated $2 billion to fund, among other purposes, these two 

categories of services under approved demonstration projects.5

 DRA 

further specified that the $2 billion could be used for two additional 

categories of expenditures that were not time-limited. With respect to the 

third category, funds were available for the nonfederal (state) share of 

expenditures for services provided to existing Medicaid and SCHIP 

beneficiaries from certain areas of the directly affected states.6

 Funds were 

also available for the fourth category of restoring access to health care in

impacted communities.7

 DRA did not specify how the $2 billion in 

Hurricane Katrina relief funding would be allocated among the states; 

rather, CMS was responsible for determining these allocations.8

Because of broad congressional interest, we performed this work under 

the Comptroller General’s statutory authority to conduct evaluations on 

his own initiative. This report presents results of our work examining: 

 3

SCHIP is a federal-state program that provides health coverage, generally, for children

living in families whose incomes exceed the eligibility limits for Medicaid. See SSA § 

2107(e) (codified at 42 U.S.C. § 1397gg(e)) regarding the applicability of section 1115 of the

SSA to the SCHIP program. 

4

For purposes of this report, the District of Columbia and insular areas (such as Puerto

Rico) that were allocated or expended DRA funds will be included in our discussion of 

states. 

5

The Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 6201, 120 Stat. 132-134 

(Feb. 8, 2006). For purposes of this report, we refer to DRA funds available for the

nonfederal share of expenditures associated with individuals affected by the hurricane

receiving Medicaid or SCHIP benefits under an approved demonstration project as 

“Category I” and DRA funds available for the total expenditures associated with 

uncompensated care services provided to individuals affected by the hurricane who had no

other method of payment or insurance as “Category II.” 

6

For purposes of this report, we refer to DRA funds available for the nonfederal share of 

expenditures associated with services provided to existing Medicaid and SCHIP

beneficiaries from certain areas of directly affected states as “Category III.” 

7

For purposes of this report, we refer to DRA funds available for expenditures associated 

with restoring access to health care in impacted communities as “Category IV.” 

8

Throughout this report, we refer to Hurricane Katrina relief funding provided through the 

DRA as DRA funding or DRA funds. 

Page 2 GAO-07-67 Hurricane Katrina and Medicaid
(1) how CMS allocated the DRA funds to states, (2) the extent to which 

states have used DRA funds, and (3) whether Alabama, Louisiana, 

Mississippi, and Texas anticipate the need for additional funds after DRA 

funds are expended. 

To conduct this work, we obtained documentation from CMS on its 

allocation of DRA funds to states. We reviewed allocations for four 

categories, as outlined below. 

• Category I—time-limited Medicaid and SCHIP services:

9

 This 

category was for the nonfederal (state) share of expenditures associated 

with Medicaid and SCHIP services (including administrative costs) 

provided to individuals affected by Hurricane Katrina and eligible under an 

approved demonstration project.10 Each state defined the populations 

eligible for its demonstration project for individuals affected by the 

hurricane. Funding is available through this category for services delivered 

through June 30, 2006. 

• Category II—time-limited uncompensated care services:

11 This 

category contained funding for the total expenditures associated with 

services (including administrative costs) provided to individuals affected

by Hurricane Katrina who did not have a method of payment or 

insurance.12 Funding is available through this category for services 

delivered through January 31, 2006. 

• Category III—existing Medicaid and SCHIP beneficiaries:

13 This 

category was designated to compensate states for the nonfederal (state) 

share of expenditures associated with services provided to existing 

Medicaid and SCHIP beneficiaries from certain areas of directly affected 

states. The DRA did not specify any time limits on funding for services 

 9

DRA, Pub. L. No. 109-171, § 6201(a)(1)(A),(C), (a)(2), 120 Stat. 132-133. 

10This category of DRA funding required CMS approval of a section 1115 demonstration

project for Katrina-affected individuals. 

11DRA, Pub. L. No. 109-171, § 6201(a)(1)(B),(D), (a)(2), 120 Stat. 132-133. 

12This category of DRA funding required CMS approval of a section 1115 demonstration

project for Katrina-affected individuals. In addition to individuals without a method of 

payment or insurance, it also included Medicaid and SCHIP-eligible individuals who did not 

have any coverage for certain services. 

13DRA, Pub. L. No. 109-171, § 6201(a)(3), 120 Stat. 132-133. 

Page 3 GAO-07-67 Hurricane Katrina and Medicaid
delivered under this category. Funding is limited to the three directly 

affected states—Alabama, Louisiana, and Mississippi. 

• Category IV—restore access to health care in impacted 

communities:

14 This category allowed for coverage of expenditures 

provided for other purposes, if approved by the Secretary of HHS, to 

restore access to health care in impacted communities. The DRA did not 

specify any time limits on funding under this category. 

We focused our review on four selected states that, as of March 29, 2006, 

had received the highest allocations of DRA funding from CMS—Alabama, 

Louisiana, Mississippi, and Texas.15 We selected March 29, 2006, because 

this was the date on which CMS made its initial allocation of DRA funds to 

states. We obtained data and information from Medicaid offices in these 

states regarding their experiences enrolling individuals, providing services, 

and submitting claims for services and administrative costs. We also 

collected Medicaid enrollment data from the four selected states through 

June 2006. In addition, we analyzed CMS data included in the Medicaid 

Budget and Expenditure System (MBES) on DRA funding for the states 

that received initial allocations as of March 29, 2006. Within the MBES, we 

examined data that states submitted for expenditures that qualified for 

DRA funding as of October 2, 2006. States submit all Medicaid data to 

MBES electronically and must attest to its completeness and accuracy. 

These data are preliminary in nature, in that they are subject to further 

review and are likely to be updated as states continue to submit claims for 

DRA funding. Nevertheless, we considered MBES data sufficiently reliable 

for purposes of conducting a preliminary assessment of claims submitted 

to date. We also contacted Medicaid officials in Arizona and Georgia to 

ascertain why they had not submitted claims for DRA funding. We chose 

Arizona and Georgia because they had not submitted claims data as of 

June 2006, but were the only two states that had logged into MBES and 

inserted placeholders for their claims data. We conducted our work from

April 2006 to October 2006 in accordance with generally accepted 

government auditing standards. 

 14DRA, Pub. L. No. 109-171, § 6201(a)(4), 120 Stat. 132-133. 

15Throughout this report, we refer to Alabama, Louisiana, Mississippi, and Texas as

“selected states.” 

Page 4 GAO-07-67 Hurricane Katrina and Medicaid
As of September 30, 2006, CMS had allocated $1.9 billion of the $2 billion 

made available by DRA to states that were directly affected by Hurricane 

Katrina or that hosted evacuees in the aftermath of the storm. Based on 

states’ estimates of their DRA expenditures, CMS allocated funds as 

follows: 

Results in Brief 

• Category I—CMS allocated about $102 million to 32 states for the 

nonfederal share of expenditures for time-limited Medicaid and SCHIP 

services for individuals affected by the hurricane and eligible under an 

approved demonstration project. 

• Category II—CMS allocated about $302 million to 8 states for expenditures 

for time-limited uncompensated care services provided to individuals 

affected by the hurricane who did not have a method of payment or 

insurance. 

• Category III—CMS allocated approximately $1.5 billion to the 3 directly 

affected states (Alabama, Louisiana, and Mississippi) for the nonfederal 

share of expenditures for existing Medicaid and SCHIP beneficiaries. 

• Category IV—CMS chose not to allocate any DRA funding to this 

category—restoring access to health care in impacted communities—

because, according to CMS, the agency viewed this category as 

discretionary in nature and not associated with direct services

expenditures. 

In allocating the $1.9 billion, CMS met 100 percent of the states’ estimated 

expenditures in categories I, II, and III. After CMS reconciles states’ 

expenditures with their allocations, CMS will determine how to allocate 

the remaining $136 million of available DRA funds and any unexpended 

funds from the approximately $1.9 billion in DRA funds previously 

allocated to states. 

Of the $1.9 billion in DRA funding that CMS allocated, states had 

submitted claims for approximately $1 billion (54 percent) as of 

October 2, 2006. Approximately two-thirds of the 32 states that received 

DRA funding (including the 4 selected states—Alabama, Louisiana, 

Mississippi, and Texas), submitted claims. The amount of claims 

submitted for Category I, the nonfederal share of expenditures for timelimited Medicaid and SCHIP services, accounted for 20 percent of 

allocations; for Category II, expenditures for time-limited uncompensated 

care services, 42 percent; and for Category III, the nonfederal share of 

expenditures for existing Medicaid and SCHIP beneficiaries, 58 percent.

Page 5 GAO-07-67 Hurricane Katrina and Medicaid
Claims from Alabama, Louisiana, and Mississippi for the nonfederal share 

of expenditures for existing Medicaid and SCHIP beneficiaries (Category 

III) accounted for about 85 percent of claims filed for all categories of 

funding. States are permitted up to 2 years after paying claims to seek 

reimbursement from CMS. According to state officials, they have not 

submitted claims to CMS in some instances because of problems 

processing providers’ claims. For example, in Mississippi, uncompensated 

care claims had to be processed manually because the state did not have a 

computerized system to accommodate such claims. Although expenditures 

varied by state, typically claims were concentrated in nursing facility 

services, inpatient hospital care, and prescription drugs. 

Of the four selected states, two states—Louisiana and Texas—raised 

concerns about their ability to meet future health care needs of those 

affected by the hurricane once the DRA funds are expended.

• Louisiana, a directly affected state that is therefore eligible for DRA 

funding for services provided beyond June 30, 2006, raised concerns that it 

would need additional funds to provide coverage for individuals affected

by the hurricane who evacuated the state but intend to return. State 

officials noted that Louisiana is currently managing what they 

characterized as a national Medicaid program, given that many individuals 

enrolled in Louisiana Medicaid are temporarily residing in other states. 

Additionally, the state has asked CMS for direction on issues such as 

managing out-of-state providers, redetermining eligibility, and ensuring 

program integrity given the state’s concern that some providers may be 

receiving payment from more than one state for the same service. 

• Texas, which is eligible only for the time-limited DRA funds from 

Categories I and II, expressed concern about its future funding needs in 

light of the many evacuees remaining in the state. To learn more about this 

population, the state commissioned a survey that indicated that evacuees 

responding to the survey continue to have a high need for services, 

including health care coverage under Medicaid and SCHIP. Because the 

state is not eligible for DRA funding for Medicaid services provided 

beyond June 30, 2006, officials expressed concern that these services are 

being provided through evacuees’ use of emergency rooms in the state or 

through local county facilities, thus straining resources that provide care 

for all Texas residents. 

The remaining two selected states—Alabama and Mississippi—while also 

eligible for ongoing DRA funding, stated that they did not anticipate a need 

for funding beyond that allocated by CMS. 

Page 6 GAO-07-67 Hurricane Katrina and Medicaid
We received comments on a draft of this report from CMS and state 

officials from Alabama, Louisiana, and Texas. In commenting, CMS 

provided additional information on an initiative aimed at assisting 

Louisiana to rebuild its health care system in the aftermath of Hurricane 

Katrina. In response to CMS’s comment that we mischaracterized the 

categories of DRA funding, we provided additional legal citations to better 

link the statutory language of DRA with the categories of funding 

presented in the report. Additionally, CMS noted that our description of its 

process for allocating unexpended funds was misleading. While the draft 

report did include a thorough description of this process, we clarified this

process in the Highlights and Results in Brief. CMS also discussed 

criticism it faced in communicating with the states, particularly Louisiana, 

regarding program implementation, coverage for out-of-state evacuees, 

and other issues. In its comments, CMS identified the steps it took to work 

with states with approved demonstration projects. While CMS may have 

provided such assistance, from Louisiana’s perspective, it was not 

sufficient to address the many issues the state is facing. Louisiana and

Texas primarily provided comments about their efforts to assist those 

affected by the hurricane and ongoing challenges as a result of Hurricane 

Katrina. Alabama provided technical comments which we incorporated as 

appropriate, while Mississippi did not provide comments. 

Medicaid and SCHIP are joint federal-state programs that finance health 

care coverage for certain categories of low-income individuals. To qualify 

for Medicaid or SCHIP, individuals must meet specific eligibility 

requirements related to their income, assets, and other personal 

characteristics such as age. Each state operates its program under a CMSapproved state plan. 

Almost immediately after Hurricane Katrina, CMS announced in a State 

Medicaid Director’s letter on September 16, 2005, that states could apply 

for Medicaid demonstration projects authorized under section 1115 of the 

SSA, through which the federal government would fund its share of 

expenditures for health care services for certain individuals affected by

the hurricane.16 These demonstration projects provided for (1) time-limited 

Medicaid and SCHIP services to allow states to quickly enroll eligible

Background 

 16See SSA § 1115 (codified at 42 U.S.C. § 1315). Throughout this report, we refer to the

section 1115 demonstrations that were approved after Hurricane Katrina with the intent of

providing services to individuals affected by the hurricane as “demonstration projects,” or

“demonstrations.” 

Page 7 GAO-07-67 Hurricane Katrina and Medicaid
individuals who were affected by the hurricane, and (2) time-limited 

uncompensated care services—allowing states to pay providers rendering 

services for individuals affected by the hurricane who do not have an 

alternative method of payment or insurance. Interested states could apply 

to CMS to offer demonstration projects for either or both categories, and 

those receiving CMS approval were permitted to seek reimbursement for 

the federal share of allowable expenditures for covered beneficiaries 

under the demonstrations. To assist states in applying for these 

demonstration projects, CMS convened a conference call with all state 

Medicaid agencies to brief them on the agency’s September 16, 2005, letter, 

discuss the application process, and provide information on other 

implementation issues, such as benefits for evacuees and relevant federal 

regulations regarding Medicaid eligibility. 

For time-limited Medicaid and SCHIP services under the demonstrations, 

states received approval to provide Medicaid and SCHIP coverage to 

certain evacuees and affected individuals.17 In establishing eligibility for 

this type of demonstration, states primarily used simplified eligibility 

criteria that CMS developed to determine if affected individuals and 

evacuees could enroll to receive time-limited Medicaid and SCHIP services 

(see table 1). 

 17Affected individuals and evacuees were individuals from certain counties or parishes of

directly affected states that were declared disaster areas eligible for individual assistance 

under section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act 

(codified at 42 U.S.C. § 5174). Affected individuals continued to reside in the same state, 

while evacuees relocated to another state after the hurricane. 

Page 8 GAO-07-67 Hurricane Katrina and Medicaid
Table 1: CMS’s Simplified Eligibility Groups for Demonstration Projects for Time-Limited Medicaid and SCHIP Services 

Simplified eligibility groups Income levels

Children under age 19 Up to and including 200 percent of the Federal Poverty Level (FPL)a

Pregnant women from Louisiana and Mississippi Up to and including 185 percent FPL 

Pregnant women from Alabama Up to and including 133 percent FPL 

Individuals with disabilities Up to and including 300 percent Supplemental Security Income (SSI)b

Low-income Medicare recipients Up to and including 100 percent FPL 

Low-income individuals in need of long-term care Up to and including 300 percent SSI 

Low-income parents of children under age 19 Up to and including 100 percent FPL 

Source: CMS. 

Note: CMS approved these demonstration projects under section 1115 of the SSA. 

a

In fiscal year 2005, the Federal Poverty Level for a family of four was $19,350 in the 48 contiguous 

United States and the District of Columbia. Federal poverty levels are not defined for Puerto Rico and 

other insular areas. 

b

SSI is a means-tested income assistance program for disabled, blind, or aged individuals. 

States with approved demonstrations for time-limited uncompensated care 

services could pay providers who delivered services to affected individuals 

and evacuees who either did not have any other coverage for health care 

services (such as private or public health insurance), or who had Medicaid 

or SCHIP coverage but required services beyond those covered under 

either program. 

On February 8, 2006, the DRA appropriated $2 billion to be available until 

expended for four funding categories—two categories associated with the 

demonstration projects, and two additional categories of funding.18 DRA 

applied time limits on the first two categories that were linked to the 

demonstration projects—that is, services must have been provided by

certain dates. The DRA did not specify time limits for the two remaining 

funding categories. (See table 2.) 

 18DRA, Pub. L. No. 109-171, § 6201, 120 Stat. 132-134. 

Page 9 GAO-07-67 Hurricane Katrina and Medicaid
Table 2: DRA Funding Characteristics and Categories 

Category I

 a,b Category IIa,c Category IIId

Category IVe

Funding 

characteristics 

Time-limited Medicaid 

and SCHIP services

Time-limited 

uncompensated care 

services 

Existing Medicaid and 

SCHIP beneficiaries 

Restore access to

health care 

Share of funding 

available 

Nonfederal share of 

expendituresf 

Total expenditures Nonfederal share of 

expendituresf 

Total expenditures 

Designated purpose of 

funding 

To reimburse eligible 

states for Medicaid and 

SCHIP services provided 

to individuals affected by 

the hurricane who meet 

certain criteria and were 

eligible under a

demonstration project 

To reimburse eligible states 

for services associated with 

caring for individuals 

affected by the hurricane

with no other source of 

payment or insurance 

To reimburse states for 

Medicaid and SCHIP 

expenditures for 

affected individuals in 

certain areas of directly 

affected states

To restore access to 

health care in impacted 

communities, when 

approved by the 

Secretary of Health and 

Human Services 

Length of availabilitygFor services provided 

through June 30, 2006 

For services provided 

through January 31, 2006 

No time period specified No time period specified

Limit on individual 

eligibility 

Up to 5 monthsh None specified None specified None specified

States eligible for funding The three directly 

affected states and 

states that accepted 

evacuees;i

 states must 

have demonstrations 

approved by CMS

The three directly affected 

states and states that 

accepted evacuees;i

 states 

must have demonstrations 

approved by CMS

The three directly 

affected statesi 

None specified

Source: GAO analysis of DRA and CMS demonstration project provisions. 

a

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. In addition to service expenditures, associated administrative costs are also covered under 

these categories.

b

DRA, Pub. L. No. 109-171, § 6201(a)(1)(A),(C), (a)(2), 120 Stat. 132-133. 

c

DRA, Pub. L. No. 109-171, § 6201(a)(1)(B),(D), (a)(2), 120 Stat. 132-133. 

d

DRA, Pub. L. No. 109-171, § 6201(a)(3), 120 Stat. 132-133. 

e

DRA, Pub. L. No. 109-171, § 6201(a)(4), 120 Stat. 132-133. 

f

DRA funding is available for the states’ share of expenditures incurred under this category. The 

remaining share of funding would be obtained from the federal Medicaid program; thus, the states’ 

expenditures in these categories would be $0 until DRA funds have been expended.

g

Although the DRA was not enacted until February 8, 2006, CMS allowed funding to be retroactive to 

August 24, 2005.

h

CMS required states to limit Medicaid and SCHIP eligibility to 5 months under their demonstration 

projects. 

i

The three directly affected states are Alabama, Louisiana, and Mississippi. 

Page 10 GAO-07-67 Hurricane Katrina and Medicaid
States could receive allocations from CMS based on certain criteria 

identified in the DRA, including whether they were directly affected by the

hurricane or hosted evacuees. States directly affected by the hurricane—

Alabama, Louisiana, and Mississippi—and states that hosted evacuees 

could receive DRA funding through Categories I and II, the nonfederal 

share of expenditures for time-limited Medicaid and SCHIP services and 

expenditures for time-limited uncompensated care services. In contrast, as 

specified by DRA, funds for Category III, the nonfederal share of 

expenditures for existing Medicaid and SCHIP beneficiaries, were 

available only to certain areas in the directly affected states. These areas 

were counties or parishes designated under the Robert T. Stafford Disaster 

Relief and Emergency Assistance Act as areas eligible to receive federal 

disaster assistance.19 According to a CMS official, shortly after Hurricane 

Katrina, 10 counties in Alabama, 31 parishes in Louisiana, and 47 counties 

in Mississippi were identified as eligible to receive such assistance and 

were declared individual assistance areas.20 (See fig. 1.) 

 19Certain counties and parishes were declared disaster areas that are eligible for individual 

assistance under section 408 of the Robert T. Stafford Disaster Relief and Emergency 

Assistance Act (codified at 42 U.S.C. § 5174). The declaration allows for a variety of federal 

programs to assist in the disaster recovery effort, including housing for individuals and

families. We refer to these areas as “designated areas of the directly affected states.” 

20In the aftermath of Hurricane Katrina, individuals were evacuated from individual 

assistance areas to other locations. Areas absorbing evacuees were within states directly 

affected by the hurricane or in other states entirely. 

Page 11 GAO-07-67 Hurricane Katrina and Medicaid
Figure 1: Affected Counties or Parishes in Louisiana, Mississippi, and Alabama

Source: GAO map using Federal Emergency Management Agency data provided by CMS.

Counties eligible for individual assistance as declared under the Stafford Act.

Louisiana

Mississippi

Alabama

Gulf of Mexico

Note: These three states were all considered directly affected by Hurricane Katrina. 

States receive reimbursement for their expenditures in each of the funding 

categories through the submission of claims to CMS. To obtain 

reimbursement of claims for services, providers first submit claims to 

states for health care services provided to affected individuals and 

evacuees. States then submit claims to CMS for DRA-covered expenditures 

made for health care services provided to affected individuals and 

evacuees under each of the DRA funding categories. In addition, although

the DRA was not enacted until February 8, 2006, CMS allowed funding to 

be retroactive to August 24, 2005. 

As of September 30, 2006, CMS had allocated approximately $1.9 billion of 

the total $2 billion in DRA funds to states that were directly affected by 

Hurricane Katrina or that hosted evacuees in the aftermath of the storm. 

CMS allocated funds to the first three categories: Category I—the 

nonfederal share of expenditures for time-limited Medicaid and SCHIP 

services; Category II—expenditures for time-limited uncompensated care 

services; and Category III—the nonfederal share of expenditures for 

existing Medicaid and SCHIP beneficiaries from designated areas of the 

CMS Allocated DRA 

Funds to Three 

Funding Categories 

Page 12 GAO-07-67 Hurricane Katrina and Medicaid
directly affected states. CMS chose not to allocate any DRA funding to 

Category IV, for restoring access to health care in impacted communities. 

CMS allocated the majority of DRA funding (78.3 percent of the $1.9 billion 

allocated) to Category III, the nonfederal share of expenditures for 

existing Medicaid and SCHIP beneficiaries, which, by law, was limited to 

the three directly affected states (Alabama, Louisiana, and Mississippi).21

CMS allocated funds to states on two occasions—an initial allocation of 

$1.5 billion on March 29, 2006, and a subsequent allocation on 

September 30, 2006. Both of these allocations were based on states’ 

estimates of their DRA expenditures. In the second allocation on 

September 30, 2006, no state received less funding than it received in the 

March 29, 2006, allocation, but allocations shifted among the DRA 

categories. 

CMS Allocated $1.9 Billion 

of DRA Funds to Three 

DRA Categories 

As of September 30, 2006, CMS had allocated approximately $1.9 billion of 

DRA funds to three DRA funding categories to 32 states. The majority of 

the $1.9 billion allocation—about $1.5 billion (78.3 percent)—is for 

Category III, existing Medicaid and SCHIP beneficiaries, which is limited 

to the three directly affected states (Alabama, Louisiana, and Mississippi). 

For Category I, time-limited Medicaid and SCHIP services, and Category II, 

time-limited uncompensated care services, states received about 

$102 million (5.5 percent of the total allocation) and about $302 million 

(16.2 percent of the total allocation), respectively. (See fig. 2.) With regard 

to Category I, 32 states received approval to extend time-limited Medicaid 

and SCHIP coverage to individuals affected by Hurricane Katrina; 

however, no states actually enrolled individuals in SCHIP. Therefore, only

Medicaid services were covered through this DRA funding category.22 Of 

these 32 states, 8 states also received approval for Category II to pay 

providers for rendering extend time-limited uncompensated care services 

to individuals affected by the hurricane. CMS officials stated that the 

 21DRA, Pub. L. No. 109-171, § 6201(a)(3), 120 Stat. 132-133. 

22Because no states enrolled individuals into SCHIP, we refer to Category I as “time-limited 

Medicaid services” for the remainder of this report. 

Page 13 GAO-07-67 Hurricane Katrina and Medicaid
agency approved the majority of states’ applications for demonstration 

projects within 45 days of the hurricane.23

Figure 2: Percentage of $1.9 Billion DRA Allocation by Funding Category, as of 

September 30, 2006 

5.5%

16.2%

78.3%

Source: GAO analysis of CMS data.

Category I: Time-limited Medicaid services

(32 states)

a

Category III: Existing Medicaid and SCHIP

beneficiaries (Alabama, Louisiana, and

Mississippi)

Category II: Time-limited uncompensated

care services (8 states)

a

a

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. 

Of the 32 states that received allocations totaling $1.9 billion, Louisiana 

received the largest amount—44.6 percent (about $832 million) of the total

allocation. Combined, the 3 directly affected states—Louisiana, Alabama, 

and Mississippi—received approximately 90 percent ($1.7 billion) of the 

$1.9 billion allocated to states. While not a directly affected state, Texas 

hosted a large number of evacuees and received about 7.6 percent 

($142 million) of the allocation. These 4 selected states together received

approximately 97.5 percent ($1.8 billion) of the $1.9 billion allocation. (See 

table 3.) 

 23Thirty-five states applied for the time-limited Medicaid and SCHIP category of the 

demonstrations, but 3 states were denied because they applied after the January 31, 2006,

deadline. Although 17 states applied for the time-limited uncompensated care services 

category of the demonstration, 9 states were denied because of their low number of 

evacuees and because of their lack of proximity to the directly affected states. 

Page 14 GAO-07-67 Hurricane Katrina and Medicaid
Table 3: CMS’s Allocation of DRA Funds to States Based on States’ Estimated Expenditures, as of September 30, 2006 

DRA allocations 

State 

Category I 

Time-limited 

Medicaid 

servicesa,b

Category II 

Time-limited 

uncompensated

care servicesb

Category III 

Existing 

Medicaid and 

SCHIP 

beneficiaries

Category IV 

Restore access 

to health care Total allocation

Percentage of

DRA allocation 

Alabama $2,377,000 $4,660,000 $241,144,000 c $248,181,000 13.3

Louisiana 23,811 132,091,048 699,528,807 c 831,643,666 44.6

Mississippi 1,815,572 75,264,730 518,482,628 c 595,562,930 32.0

Texas 76,872,000 65,336,000 d c142,208,000 7.6

Subtotal 81,088,383 277,351,778 1,459,155,435 0 1,817,595,596 97.5

Remaining states 21,315,202 25,002,000 d c46,317,202 2.5

Total $102,403,585 $302,353,778 $1,459,155,435 c $1,863,912,798 100.0

Source: GAO analysis of CMS data. 

Note: This table accounts for the approximately $1.9 billion of DRA funds allocated to states as of 

September 30, 2006. 

a

While states applied for and received approval to extend time-limited SCHIP coverage to individuals 

affected by Hurricane Katrina, no states actually enrolled individuals in SCHIP. 

b

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. In addition to service expenditures, associated administrative costs are also included. 

c

CMS did not allocate funds to this category. 

d

State was not eligible for funding to this category. 

CMS Provided Allocations 

to States on Two 

Occasions 

CMS provided DRA allocations on two occasions, and both allocations 

were based on states’ estimated DRA expenditures.24 CMS first allocated 

$1.5 billion to 32 states on March 29, 2006. After the DRA was enacted in 

February 2006, CMS requested states’ estimated fiscal year 2006 

expenditures for three of the four DRA funding categories: Category I—the 

nonfederal share of expenditures for time-limited Medicaid services; 

Category II—expenditures for time-limited uncompensated care services;

and Category III—for directly affected states, the nonfederal share of 

expenditures for existing Medicaid and SCHIP beneficiaries. CMS did not 

 24When submitting estimates to CMS, states provided estimated expenditures by service, as 

well as any associated administrative costs for Categories I and II, time-limited Medicaid 

and uncompensated care services. For Category III, existing Medicaid and SCHIP 

beneficiaries, CMS did not ask states to provide a breakdown of service and administrative 

costs, but did request separate estimates for Medicaid and SCHIP. 

Page 15 GAO-07-67 Hurricane Katrina and Medicaid
request that the three directly affected states estimate expenditures for 

Category IV—restoring access to health care in impacted communities. 

CMS officials told us that they viewed restoring access to care as 

discretionary in nature and not associated with direct service 

expenditures. In the March 29, 2006, allocation, CMS fully funded 32 states’ 

estimated expenditures for DRA funding for Categories I and II, and also 

provided the three directly affected states with allocations to 

approximately half of their estimated expenditures for Category III. 

Because allocations were based on states’ estimates, CMS withheld 

$500 million of the $2 billion available for the initial allocation, anticipating

that allocations would need to be realigned. 

In July 2006, CMS requested updated estimates of DRA expenditures for 

fiscal year 2006 for the same three categories: the two time-limited 

categories for Medicaid and uncompensated care services (Categories I 

and II) and the existing Medicaid and SCHIP beneficiaries (Category III). 

On September 30, 2006, CMS allocated an additional amount of about 

$364 million to states, which, combined with the initial March 29, 2006, 

allocation of $1.5 billion, provided a total allocation of approximately 

$1.9 billion. This allocation was based on states’ updated estimated 

expenditures for each of the three DRA categories for which CMS 

provided funding. For the second allocation, each of the three directly 

affected states received allocations of 100 percent of their updated 

estimated expenditures for all three funding categories. 

While CMS did not decrease any state’s allocation as a result of the July 

2006 request for updated estimates, it did shift allocation amounts among 

DRA funding categories when necessary for the September 30, 2006, 

allocation. Therefore, each state received its allocation amount from 

March 29, 2006, plus any additional funding included in the updated 

estimated expenditures. As a result, some states that lowered their 

subsequent estimates received more than they requested. For example, 

Texas lowered its initial estimated expenditures from $142 million (its 

March 29, 2006, estimate) to approximately $36 million. CMS did not 

change Texas’ allocation from the amount the state received on March 29, 

2006; thus, Texas retained an allocation of $142 million.25 Other states 

received more than they were initially allocated. For example, Alabama 

 25CMS did not decrease the amounts states received in the March 29, 2006, allocation (even 

if their updated estimated expenditures were less than the March 29, 2006, allocation),

because when CMS fully funded states’ increased estimated expenditures, the total 

allocation of $1.9 billion was still less than the $2 billion in DRA funds available. 

Page 16 GAO-07-67 Hurricane Katrina and Medicaid
requested about $181 million initially, but gave CMS an updated estimate 

of $248 million. CMS initially allocated Alabama approximately 

$97 million, but increased its allocation to $248 million on September 30, 

2006. (See table 4.) 

Table 4: Selected States’ Initial and Updated Estimated Expenditures and CMS’s 

Initial and Updated Allocations, as of September 30, 2006 

Initial Updated

State 

States’ 

estimated

expenditures 

March 29, 2006, 

allocationa 

States’ 

estimated

expendituresb

September 30,

2006, allocation

Alabama 181,472,000 96,946,000 248,181,000 248,181,000

Louisiana 1,092,652,000 768,982,000 831,643,666 831,643,666

Mississippi 793,294,000 446,521,000 595,562,930 595,562,930

Texas 142,208,000 142,208,000 35,713,063 142,208,000

Total 2,209,626,000 1,454,657,000 1,711,100,659 1,817,595,596

Source: GAO analysis of CMS data. 

a

CMS’s initial allocation on March 29, 2006, provided states with allocations of 100 percent of their 

estimated expenditures for Categories I and II. For Category III, which was available only to the 

directly affected states, Alabama, Louisiana, and Mississippi each received allocations of 

approximately half of their estimated expenditures. CMS did not allocate any funds to Category IV. 

b

Represents states’ updated estimated DRA expenditures for fiscal year 2006 requested by CMS in 

July 2006. 

As of September 30, 2006, $136 million in DRA funding remained available 

for allocation. CMS officials stated that, during the first quarter of fiscal 

year 2007, they plan to reconcile states’ expenditures submitted to CMS 

with the allocation amounts provided to states on September 30, 2006. 

After this reconciliation is completed, CMS will determine how to allocate 

the remaining $136 million of available DRA funds and any unexpended 

funds of the approximately $1.9 billion previously allocated to states. 

As of October 2, 2006, states had submitted to CMS claims for services—

including associated administrative costs—totaling about $1 billion (or 

54 percent) of the $1.9 billion in DRA funds allocated to them. The amount 

of claims submitted and the number of states that submitted claims varied 

by DRA category. Of the 32 states that received allocations from CMS, 22 

states have submitted claims, including the 3 directly affected states. Some 

state officials said they faced obstacles processing DRA-related claims. 

While DRA-related expenditures varied by state, claims were concentrated

in nursing facilities, inpatient hospital care, and prescription drugs. 

States Have 

Submitted Claims for 

About Half of Total 

DRA Allocations 

Page 17 GAO-07-67 Hurricane Katrina and Medicaid
Of the 32 states that received DRA allocations, about two-thirds (22) had 

submitted claims for expenditures to CMS as of October 2, 2006. The 

submitted claims accounted for about 54 percent of CMS’s $1.9 billion 

allocated to states. States that submitted claims for reimbursement did so 

for amounts that ranged from about 7 percent to approximately 96 percent

of their allocations. (See table 5.) Each of the 4 selected states we 

reviewed—Alabama, Louisiana, Mississippi, and Texas—had submitted 

claims by this time. 

About Two-Thirds of 

Eligible States Have 

Submitted Claims for 

Reimbursement, 

Accounting for 54 Percent 

of Total Allocations

Table 5: CMS Allocation of DRA funds and States’ Claims Submitted for 

Reimbursement, by State, as of October 2, 2006 

States 

Total CMS 

allocation of DRA 

funds

States’ DRA claims 

submitted

DRA claims

submitted as

percentage of

state’s allocation

Alabama $248,181,000 $127,161,817 51.2

Arizona 713,000 445,219 62.4

Arkansas 5,370,000 661,954 12.3

Delaware 429,000 49,902 11.6

District of Columbia 80,541 72,305 89.8

Florida 2,871,000 1,788,666 62.3

Idaho 44,000 34,652 78.8

Indiana 368,332 208,314 56.6

Iowa 240,000 203,514 84.8

Louisiana 831,643,666 434,790,616 52.3

Maryland 701,000 326,317 46.6

Minnesota 383,581 291,759 76.1

Mississippi 595,562,930 400,531,996 67.3

Montana 25,000 22,002 88.0

Nevada 250,000 213,160 85.3

Ohio 404,000 301,275 74.6

South Carolina 1,212,000 408,696 33.7

Tennessee 7,528,467 487,675 6.5

Texas 142,208,000 30,817,487 21.7

Utah 275,000 233,935 85.1

Wisconsin 1,170,234 154,385 13.2

Wyoming 14,000 13,368 95.5

10 remaining statesa24,238,047 0 0.0

Totals $1,863,912,798 $999,219,014 53.6

Source: GAO analysis of CMS and MBES data. 

Page 18 GAO-07-67 Hurricane Katrina and Medicaid
Note: This table includes the three DRA funding categories for which states received allocations: 

(I) time-limited Medicaid and SCHIP services, (II) time-limited uncompensated care services, and 

(III) existing Medicaid and SCHIP beneficiaries. The selected states—Alabama, Louisiana, 

Mississippi, and Texas—which received the highest allocations of DRA funding are presented in bold

type. 

a

The remaining 10 states received allocations but had not submitted claims as of October 2, 2006. 

The remaining states are: California, Georgia, Massachusetts, North Carolina, North Dakota, Oregon,

Pennsylvania, Puerto Rico, Rhode Island, and Virginia. 

Of the claims submitted for the two time-limited funding categories, 22 of 

32 states submitted claims for Medicaid services (Category I) and 6 of 8

states submitted claims for uncompensated care services (Category II). 

The claims submitted constituted approximately 20 percent of total 

allocations to Medicaid and about 42 percent of total allocations to 

uncompensated care services. Of the 4 selected states, 3 states—Alabama, 

Mississippi, and Texas—submitted claims for Medicaid services, while all 

4 selected states submitted claims for uncompensated care services. (See

table 6.) 

Page 19 GAO-07-67 Hurricane Katrina and Medicaid
Table 6: CMS Allocation of DRA Funds and States’ Claims Submitted, by Time-limited Funding Categories, as of 

October 2, 2006 

Time-limited funding categoriesa

Category I: Medicaid servicesbCategory II: Uncompensated care services

States 

CMS allocation 

of DRA funds

DRA claims

submitted 

DRA claims

submitted as a 

percentage of

CMS allocation

CMS allocation 

of DRA funds

DRA claims

submitted

DRA claims

submitted as a 

percentage of

CMS allocation

Alabama $2,377,000 $1,887,744 79.4 $4,660,000 $116,214 2.5

Arizona 713,000 445,219 62.4 c c c

Arkansas 670,000 525,145 78.4 4,700,000 136,809 2.9

Delaware 429,000 49,902 11.6 c c c

District of Columbia 80,541 72,305 89.8 c c c

Florida 2,871,000 1,788,666 62.3 c c c

Idaho 44,000 34,652 78.8 c c c

Indiana 368,332 208,314 56.6 c c c

Iowa 240,000 203,514 84.8 c c c

Louisiana 23,811 0 0.0 132,091,048 101,305,491 76.7

Maryland 701,000 326,317 46.6 c c c

Minnesota 383,581 291,759 76.1 c c c

Mississippi 1,815,572 1,270,965 70.0 75,264,730 6,940,321 9.2

Montana 25,000 22,002 88.0 c c c

Nevada 250,000 213,160 85.3 c c c

Ohio 404,000 301,275 74.6 c c c

South Carolina 1,088,000 406,918 37.4 124,000 1,778 1.4

Tennessee 1,850,467 487,675 26.4 5,678,000 d d

Texas 76,872,000 11,690,643 15.2 65,336,000 19,126,844 29.3

Utah 275,000 233,935 85.1 c c c

Wisconsin 1,170,234 154,385 13.2 c c c

Wyoming 14,000 13,368 95.5 c c c

Remaining statesd9,738,047 d d14,500,000 d d

Totals $102,403,585 $20,627,863 20.1 $302,353,778 $127,627,457 42.2

Source: GAO analysis of CMS and MBES data. 

Note: The four selected states—Alabama, Louisiana, Mississippi, and Texas—which received the 

highest allocations of DRA funding are presented in bold type. 

a

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. In addition to service expenditures, associated administrative costs are also included. 

b

While states applied for and received approval to extend time-limited SCHIP coverage to individuals 

affected by Hurricane Katrina, no states actually enrolled individuals in SCHIP. 

c

State did not receive an allocation to Category II—time-limited uncompensated care funding. 

Page 20 GAO-07-67 Hurricane Katrina and Medicaid
d

As of October 2, 2006, state(s) had not submitted claims. 

e

The remaining states that received allocations but had not submitted claims as of October 2, 2006, 

are: California, Georgia, Massachusetts, North Carolina, North Dakota, Oregon, Pennsylvania, Puerto

Rico, Rhode Island, and Virginia. 

Only the three directly affected states—Alabama, Louisiana, and 

Mississippi—were eligible to receive DRA funding for existing Medicaid 

and SCHIP beneficiaries (Category III). The claims submitted by the 

directly affected states constituted approximately 58 percent of total 

allocations to Category III. (See table 7.) In addition, claims from the three 

directly affected states for existing Medicaid and SCHIP beneficiaries 

accounted for about 85 percent of all DRA claims filed. While funds for 

existing Medicaid and SCHIP beneficiaries were available for both 

programs, about 98 percent of claims submitted were for Medicaid 

expenditures. 

Table 7: Claims Submitted for the Nonfederal Share of Expenditures for Existing

Medicaid and SCHIP Beneficiaries (Category III), as of October 2, 2006 

States 

Total CMS allocations

of DRA funds 

DRA claims

submitted 

DRA claims submitted 

as percentage of CMS 

allocation

Alabama $241,144,000 $125,157,859 51.9

Louisiana 699,528,807 333,485,125 47.7

Mississippi 518,482,628 392,320,710 75.7

Total $1,459,155,435 $850,963,694 58.3

Source: GAO analysis of CMS and MBES data. 

It has taken longer than usual for states—both those directly affected by 

the hurricane as well as states that hosted evacuees—to submit claims. 

Typically, Medicaid expenditure reports are due the month after the 

quarter ends. CMS officials estimated that about 75 percent of states 

submit their Medicaid expenditures within 1 to 2 months after the close of

a quarter. However, data are not finalized until CMS and states ensure the 

accuracy of claims. The process of states submitting claims for DRArelated expenditures has been more prolonged. As with other Medicaid 

claims, states are permitted up to 2 years after paying claims to seek 

reimbursement from CMS. Therefore, these initial results are likely to 

change as states continue to file claims for services. As of October 2, 2006, 

10 of 32 states that received allocations of DRA funding had not submitted 

any claims even though fiscal year 2006 ended on September 30, 2006. 

Page 21 GAO-07-67 Hurricane Katrina and Medicaid
Some state officials told us that they were having difficulties submitting 

claims because of various obstacles related to processing claims or 

receiving claims from providers, including needing to manually process 

claims or adapt computer systems to accommodate the new types of 

claims being submitted. For example, Mississippi officials explained that

they were manually processing claims for time-limited uncompensated 

care services because they did not have an electronic system for 

processing such claims. Georgia officials reported that the state’s claims 

processing system had to be adjusted in order to properly accept claims 

for time-limited uncompensated care services. After such adjustments 

were made, Georgia officials anticipated accepting these claims from midJuly through the end of August 2006. Alabama officials noted that they had 

to specifically request that providers submit claims for the costs of 

providing uncompensated care services they may have assumed would not 

be reimbursable. 

States’ Claims Were 

Concentrated in Three 

Service Areas 

Claims that the four selected states submitted for Medicaid expenditures 

in the three categories of DRA funding we reviewed varied, but were 

typically concentrated in three service areas: nursing facilities, inpatient

hospital care, and prescription drugs. For example, all four selected states 

had nursing facility services as one of their top four services for which 

they submitted claims, while only Alabama had home and communitybased services as one of its services with the highest expenditures. Of the 

claims submitted by states, the proportions attributed to specific services 

varied across the states. (See table 8.) 

Page 22 GAO-07-67 Hurricane Katrina and Medicaid
Table 8: Percentages of Submitted Claims for Top Four Medicaid Services in Each Selected State, as of October 2, 2006 

Selected

states 

Nursing

facilities 

Inpatient 

hospitals

Prescribed

drugs

Outpatient 

hospitals

Physician

services 

Home and 

community

services

Other

practitioners

Alabama 24.8 a18.6 a 7.7 11.5 a

Louisiana 14.0 19.8 24.8 a8.5 a a

Mississippi 18.8 22.9 14.2 9.1 a a a 

Texas 10.7 38.8 a 12.4 a a8.9

Source: GAO analysis of MBES data. 

a

Claims submitted for this service were not among the top four services of this state.

Alabama, Louisiana, and Mississippi submitted claims for the nonfederal 

share of expenditures for SCHIP services to existing SCHIP beneficiaries. 

Overall, the dollar amount of claims for SCHIP represented approximately 

2 percent of the total value of claims submitted. As of October 2, 2006, the 

top four SCHIP expenditures in Alabama were for physician services 

(22.8 percent), prescription drugs (20.7 percent), inpatient hospital 

services (13.4 percent), and dental services (12.1 percent). The top four 

SCHIP expenditures in Louisiana were for prescription drugs 

(45.4 percent), physician services (22.4 percent), outpatient hospital 

services (12.5 percent), and inpatient hospital services (9.8 percent). For 

Mississippi, all of the claims for DRA funds were for expenditures 

associated with paying SCHIP premiums for certain enrollees. 

Two of our four selected states raised concerns about their ability to meet 

the future health care needs of those affected by the hurricane once DRA 

funds have been expended: Louisiana, which is eligible for DRA funding 

for Category III services that may be provided beyond June 30, 2006; and 

Texas, which is not eligible for such ongoing assistance. Of the three 

directly affected states—Alabama, Louisiana, and Mississippi—only 

Louisiana raised concerns that it would need additional funds to provide 

coverage for individuals affected by the hurricane who evacuated the state

yet remain enrolled in Louisiana Medicaid. Alabama and Mississippi 

officials did not anticipate the need for additional funding beyond what 

was already allocated by CMS. In contrast, because Texas is eligible only 

for the time-limited DRA funds from Category I and Category II, state 

officials expressed concern about future funding needs in light of the 

many evacuees remaining in the state. To learn more about this 

population, the state commissioned a survey that indicated that evacuees 

Louisiana and Texas 

Raised Concerns 

Regarding Future 

Funding Needs 

Page 23 GAO-07-67 Hurricane Katrina and Medicaid
responding to the survey continue to have a high need for services, 

including health care coverage under Medicaid and SCHIP. 

Louisiana’s Concerns 

Centered on Its Ability to 

Administer and Fund 

Medicaid Coverage for 

Out-of-State Evacuees 

Only the three directly affected states—Alabama, Louisiana, and 

Mississippi—are eligible for DRA funds for Category III services, which 

were designated to compensate states for the state share of expenditures 

associated with services provided to existing Medicaid and SCHIP 

beneficiaries from certain areas of directly affected states beyond 

June 30, 2006. This additional DRA funding could potentially be available 

from any unused funds of the $1.9 billion allocated on September 30, 2006,

and the $136 million remaining from the $2 billion appropriated. It is 

unclear how much of the $1.9 billion allocation will be unused and thus 

available for redistribution. Additionally, it is not yet known how the 

remaining $136 million will be distributed, but CMS will make that 

determination after reconciling states’ claims submitted during the first 

quarter of fiscal year 2007 with the allocations. Of the three states eligible

for ongoing DRA funding, only Louisiana raised concerns that additional 

funds will be necessary; Alabama and Mississippi did not anticipate 

additional funding needs beyond those CMS already allocated.

Louisiana’s funding concerns were associated with managing its program 

across state borders as evacuees who left the state continue to remain 

eligible for Louisiana Medicaid. State officials acknowledged that their 

immediate funding needs have been addressed by the September 30, 2006, 

allocation; however, they remain concerned that they do not have the 

financial or administrative capacity to serve their Medicaid beneficiaries 

across multiple states.26 Louisiana officials also cited the difficulty of 

maintaining what they characterized as a national Medicaid program for 

enrolled individuals and providers living in many different states. 

Louisiana has submitted claims for DRA funding for Category III for 

existing Medicaid and SCHIP beneficiaries (individuals enrolled in 

Louisiana Medicaid) who resided in 1 of the 31 affected parishes in 

Louisiana prior to Hurricane Katrina, but evacuated to another state after 

 26While administrative costs associated with providing services for Louisiana’s existing 

Medicaid beneficiaries would qualify for federal matching funds under Medicaid, Louisiana 

officials cited the added complexity and cost of ensuring that such beneficiaries were 

originally from 1 of the 31 affected parishes in order to qualify for funding under Category

III. This would increase the state’s share of administrative costs, which would not be 

covered under the DRA.

Page 24 GAO-07-67 Hurricane Katrina and Medicaid
the hurricane, and who continue to reside in that state.27 Because many of 

these evacuated individuals have expressed intent to return to Louisiana, 

they have not declared residency in the state where they have been living 

since Hurricane Katrina. Under these circumstances, these individuals 

have continued to remain eligible for Louisiana Medicaid. However, 

Louisiana officials were uncertain how long the state would be expected 

to continue this coverage on a long-distance basis. While DRA funds cover 

the nonfederal (Louisiana state) share of service expenditures for these 

Medicaid and SCHIP beneficiaries (Category III), they are not designated 

to include reimbursement for the administrative costs associated with 

serving Louisiana Medicaid beneficiaries living in other states.28

In particular, Louisiana officials noted the following difficulties, which 

were also outlined in a May 15, 2006, letter to HHS and a May 26, 2006, 

letter to CMS. These letters requested specific direction from CMS on the 

issues presented as well as permission to waive certain federal Medicaid 

requirements that Louisiana believes it has been unable to comply with. In 

commenting on a draft of our report, Louisiana officials stated that as of 

November 30, 2006, they had not received the written guidance that they 

requested from CMS on the following issues: 

• Managing and monitoring a nationwide network of providers. 

Covering individuals who have evacuated from the state but remain 

eligible for Louisiana Medicaid requires the state to identify, enroll, and 

reimburse providers from other states.29 According to Louisiana officials, 

the state has enrolled more than 16,000 out-of-state providers in Louisiana 

 27Louisiana did not enroll any evacuees entering the state into its time-limited Medicaid 

demonstration. Because the state did not expand eligibility as permitted under its approved 

demonstration project, Louisiana enrolled all evacuees who relocated in the state and who 

were eligible into its traditional Medicaid program. There were 52 individuals who met

these criteria and were enrolled in Louisiana Medicaid. 

28Funds for the nonfederal share of administrative costs are included in Categories I and II, 

time-limited Medicaid and SCHIP services and time-limited uncompensated care services,

but not for Category III, existing Medicaid and SCHIP beneficiaries. Coverage in Category I 

was limited to services provided from August 24, 2005, through June 30, 2006, for the timelimited Medicaid and SCHIP beneficiaries eligible under a demonstration. Coverage in

Category II was limited to services provided from August 24, 2005, through 

January 31, 2006, for uncompensated care provided to individuals without a method of 

payment or insurance. 

29To ensure that evacuees from Louisiana had access to care while temporarily residing in 

other states, Louisiana Medicaid stated that it had enrolled out-of-state providers by using 

emergency procedures and waiving some provider enrollment requirements. 

Page 25 GAO-07-67 Hurricane Katrina and Medicaid
Medicaid since August 28, 2005. The state does not believe that it can 

manage and monitor a nationwide network of providers indefinitely. 

Therefore, Louisiana is seeking guidance from CMS to ensure that the 

state is continuing to comply with federal Medicaid requirements for 

payments for services furnished to out-of-state Medicaid beneficiaries.30

• Redetermining eligibility. Federal Medicaid regulations require that 

states redetermine eligibility at least annually as well as when they receive 

information about changes in individuals’ circumstances.31 Louisiana 

officials indicated that they had received approval through its 

demonstration project to defer redetermination processes through 

January 31, 2006. Officials noted that they have more than 100,000 

individuals from affected areas whose eligibility had not yet been 

redetermined as of May 26, 2006. Officials say they do not want to take

beneficiaries who need coverage off the state’s Medicaid rolls for 

procedural reasons, and thus would prefer to conduct mail-in renewals 

and have a process for expedited reenrollment upon return to the state. 

According to Louisiana officials, the state’s redetermination processes are 

currently on hold while CMS examines the possibility of granting a waiver 

for redetermining eligibility for individuals from the most severely affected

parishes around New Orleans. 

• Maintaining program integrity. Louisiana officials explained that 

running a Medicaid program in multiple states raises issues of program 

integrity. While some providers have contacted Louisiana Medicaid to 

report that they have received payment from more than one state, 

Louisiana officials believe that other providers are not reporting 

overpayments. State officials indicated that they will conduct postpayment 

claims reviews to ensure that double billing and other fraudulent activities

have not occurred. These officials estimated that this effort to review 

claims could be time consuming, taking approximately 3 to 8 years to 

complete. Because Louisiana believes that it is unable to ensure the 

integrity of the program as long as it continues enrolling out-of-state 

providers, the state requested specific direction from CMS on whether to 

continue such enrollment efforts. 

 30See SSA § 1902(a)(16); 42 C.F.R. §431.52 for requirements governing Medicaid payments 

for services furnished out of state. 

31See 42 C.F.R §435.916 for regulations governing periodic Medicaid eligibility 

redeterminations. 

Page 26 GAO-07-67 Hurricane Katrina and Medicaid
• Ensuring access to services. Louisiana officials expressed a concern 

about the state’s ability to ensure access to home and community-based 

services in other states. Officials noted that some states have long waiting 

lists for this type of long-term care, making it difficult for them to provide 

services that assist in keeping individuals in the community rather than in

an institution. Additionally, as a requirement of providing home and 

community-based services, measures are needed to protect the health and 

welfare of beneficiaries. However, officials stated that Louisiana is not in 

the position to assure the health and safety of individuals requiring these 

services out of the state. Thus, the state asked CMS for direction on how 

to continue operating its Medicaid program without violating the federal

requirement to assure the health and welfare of beneficiaries receiving

home and community-based services. 

While Texas is not a directly affected state and therefore not eligible for 

DRA funding for any Medicaid or SCHIP services provided beyond 

June 30, 2006, it has been significantly affected by the number of evacuees 

seeking services, thus prompting concern among state officials regarding 

the state’s future funding needs. To address the health needs of evacuees 

entering the state, Texas enrolled these individuals into Medicaid under 

Category I—providing time-limited Medicaid services for evacuees who 

were eligible under an approved demonstration project.32 In comparison to 

Alabama and Mississippi, which also enrolled evacuees into time-limited 

Medicaid services, Texas enrolled the largest number of evacuees—

peaking at nearly 39,000 individuals in January 2006. (See table 9). 

Texas Is Hosting Large 

Number of Evacuees 

Whose Future Plans Are 

Uncertain 

 32Under demonstration projects, states were permitted to provide coverage to evacuees for 

up to 5 months beginning when the individual became eligible but not running beyond 

June 30, 2006. For example, if a person became eligible for Medicaid coverage under the 

demonstration on October 1, 2005, his or her eligibility would continue for 5 months, 

ending on February 28, 2006.

Page 27 GAO-07-67 Hurricane Katrina and Medicaid
Table 9: Selected States’ Monthly Enrollment in Category I, Time-limited Medicaid

Services 

Category I enrollment

a 

Year Month Alabama Mississippi Texas

2005 September 541 0 0

October 2,755 979 9,049

November 3,722 2,106 22,694

December 4,345 3,201 32,687

2006 January 2,751 3,675 38,783

February 2,110 3,396 28,766

March 1,439 2,222 14,931

April 1,088 1,232 6,995

May 879 691 482

June 798 132 b 

Source: States’ Medicaid enrollment data. 

Note: Louisiana was excluded from this table because it did not enroll any evacuees in the timelimited Medicaid category of its demonstration. Louisiana officials informed us that 52 evacuees who 

relocated to Louisiana met the state’s criteria for its traditional Medicaid program and were enrolled in 

that program. 

a

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. While states applied for and received approval to extend time-limited SCHIP coverage to

individuals affected by Hurricane Katrina, no states actually enrolled individuals in SCHIP. 

b

Data were not available. 

Texas also submitted claims for Category II DRA funds for time-limited 

uncompensated care services to evacuees, shortly after the hurricane. 

Enrollment into this category grew steadily from 2,224 individuals in 

October 2005 to 9,080 individuals in January 2006. Figure 3 shows the 

enrollment patterns for the Texas Medicaid program, as well as Category I 

and Category II services provided for the period following Hurricane 

Katrina. 

Page 28 GAO-07-67 Hurricane Katrina and Medicaid
Figure 3: Texas Monthly Enrollment for Its Traditional Medicaid Program and DRA 

Categories I and II, July 2005-June 2006 

Source: GAO analysis of state’s Medicaid enrollment data.

Time-limited uncompensated care services

Time-limited Medicaid services

Texas Medicaid program

Texas

Enrollment

2,575,000

2,600,000

2,625,000

2,650,000

2,675,000

2,700,000

2,725,000

2,750,000

2,775,000

2,800,000

2,825,000

2,850,000

2,875,000

2,900,000

//

0

Jul. 05

Au

Jan. 06

g. 05

Sep. 05

Oct. 05

Nov. 05

Dec. 05

Feb. 06

Mar. 06

Apr. 06

May 06

Jun. 06

Hurricane Katrina

Page 29 GAO-07-67 Hurricane Katrina and Medicaid
To better understand the characteristics, needs, and future plans of the 

evacuee population, the Texas Health and Human Services Commission 

contracted with the Gallup Organization to survey Hurricane Katrina 

evacuees in Texas.33 Data from survey respondents indicated that, as of 

June 2006, evacuees remaining in the state were predominantly adult 

women who lived in low-income households with children and had 

increasing rates of uninsurance since the hurricane.34 Despite the loss of 

insurance coverage, the survey indicated that fewer evacuees received 

Medicaid than previously expected and the loss of insurance primarily 

affected children’s health coverage. Evacuees appear to be turning to 

hospital emergency departments to meet their health care needs, as survey 

respondents reported an increase in emergency room visits in the past 

6 months. Texas officials confirmed that evacuees who were previously 

eligible for the two DRA categories for time-limited coverage (Medicaid 

and uncompensated care services) are beginning to present themselves to 

local county facilities for their health care needs, thus straining local 

resources to provide care for all Texas residents. Based on this survey, 

Texas officials said they are concerned that they will continue to host an 

evacuee population with high needs who do not have immediate plans to

leave the state. In particular, over half of the survey respondents believe 

they will continue to reside in Texas in the next 6 months and half believe 

they will still be there in 1 year. Texas was not a directly affected state and 

is therefore not eligible for ongoing assistance through the DRA; funding 

for Category I only covers services provided as of June 30, 2006, and 

funding for Category II only covers services provided as of January 31, 

2006. 

We provided copies of a draft of this report to CMS and the four states we 

reviewed: Alabama, Louisiana, Mississippi, and Texas. We received written 

general and additional comments from CMS (see app. II) and from 

Louisiana and Texas (see apps. III and IV, respectively). Alabama provided 

technical comments, while Mississippi did not comment on the draft 

report. 

Agency and State 

Comments and Our 

Evaluation 

 33See Hurricane Katrina Evacuees in Texas, Texas Health and Human Services

Commission, Epidemiology Team, Strategic Decision Support, Financial Services Division, 

August 2006. The target population for the survey included all Hurricane Katrina evacuees 

from other states who resided in Texas at the time of the survey, which was administered 

in May and June 2006. The statewide survey response rate was 38 percent.

34Survey respondents largely reported earning less than $1,000 per month before the 

hurricane. 

Page 30 GAO-07-67 Hurricane Katrina and Medicaid
In commenting on the draft report, CMS provided information on an 

initiative it took to respond to Hurricane Katrina. The agency indicated 

that HHS, which oversees CMS, worked closely with Louisiana’s 

Department of Health and Hospitals to assist the state in convening the

Louisiana Health Care Redesign Collaborative, which will work to rebuild 

Louisiana’s health care system. We did not revise the text of the report to 

include information on this effort because it was beyond the scope of this 

report. However, we have earlier reported on HHS efforts to help rebuild 

Louisiana’s health care system.35

CMS also commented on three issues: our characterization of the 

categories of funding provided through DRA, our description of CMS’s 

reconciliation process, and criticism it faced in communicating with the 

states, particularly Louisiana and Texas, regarding program 

implementation, coverage for out-of-state evacuees, and other issues. 

These comments are addressed below. 

CMS commented that we mischaracterized the categories of DRA funding 

by specifying them in the report as Categories I, II, III, and IV. We 

developed these four descriptive categories, which were derived from 

provisions of the DRA, in order to simplify report presentation. However, 

to respond to CMS’s comment, we included additional legal citations in the 

report to better link the statutory language of the DRA with the categories

of funding presented in this report. We did not, however, adopt all of 

CMS’s descriptions of DRA provisions as CMS presented some of the 

descriptions inaccurately. In particular, CMS presented DRA sections 

6201(a)(3) and 6201(a)(4) as providing federal funding under an approved 

section 1115 demonstration project, but as stated in the report, such 

approval is irrelevant to this funding.

CMS also commented that the report was misleading because it did not 

fully describe the reconciliation process that will be used to allocate 

remaining and unused DRA funds. Specifically, the agency indicated that 

we did not explain that additional DRA allocations would be made to 

states not only from the remaining $136 million in unallocated funds but 

also from any unspent funds already allocated to states. The draft report 

 35See GAO, Hurricane Katrina: Status of Hospital Inpatient and Emergency

Departments in the Greater New Orleans Area, GAO-06-1003 (Washington, D.C.: 

Sept. 29, 2006); and Hurricane Katrina: Status of the Health Care System in New Orleans 

and Difficult Decisions Related to Efforts to Rebuild It Approximately 6 Months After 

Hurricane Katrina, GAO-06-576R (Washington, D.C.: Mar. 28, 2006). 

Page 31 GAO-07-67 Hurricane Katrina and Medicaid
did contain a full explanation of the reconciliation process. However, to 

address CMS’s comment, we clarified this process in the report’s 

Highlights and Results in Brief. 

Finally, CMS disagreed with statements in the draft report that Louisiana 

had not received the requested direction detailed in letters written to HHS 

on May 15, 2006, and CMS on May 26, 2006. Louisiana’s letters included 

concerns and questions that arose after the state implemented its section 

1115 demonstration project. CMS indicated that it provided and continues 

to provide technical assistance to all states with section 1115 

demonstration projects for Hurricane Katrina assistance beyond the states 

reviewed in this report. In particular, immediately following the hurricane

CMS provided guidance to states through a conference call and a 

September 16, 2005, letter sent to all state Medicaid directors that 

explained the process of applying for the section 1115 demonstration 

project, the benefits and eligibility criteria for evacuees, the 

uncompensated care pool, and other pertinent information. We revised the 

report to reflect the guidance that CMS provided to the states immediately 

following the hurricane. CMS also commented that it worked with 

Louisiana and the other hurricane-affected states on redetermining 

eligibility through a conference call, and provided information to 

Louisiana several times regarding regulations that the state should follow 

for redetermining eligibility on an annual basis. Further, CMS indicated 

that it provided technical assistance to Louisiana in its efforts to ensure 

program integrity and access to health care services. While CMS may have 

provided such assistance, from Louisiana’s perspective, it was not 

sufficient to address the many issues the state is facing. In Louisiana’s 

written comments, state officials maintained that as of November 30, 2006,

they had not received written guidance from CMS regarding the issues 

outlined in their May 15, 2006, letter.

Comments from Louisiana and Texas centered on each state’s efforts to 

assist those affected by the hurricane and the ongoing challenges that 

exist as a result of Hurricane Katrina. In particular, Louisiana emphasized 

the lack of response from HHS regarding its concerns about running its 

Medicaid program in many states and related difficulties to ensuring the 

program’s integrity. Texas commented on its continued need to provide 

health care services to Hurricane Katrina evacuees given the results of a 

survey conducted by the Gallup Organization, which indicated that most of 

the evacuees still residing in Texas were uninsured as of June 2006. 

Additional technical and editorial comments from CMS and the states 

were incorporated into the report as appropriate.

Page 32 GAO-07-67 Hurricane Katrina and Medicaid
We are sending a copy of this report to the Secretary of Health and Human 

Services and the Administrator of CMS. We will make copies available to 

others upon request. In addition, the report will be available at no charge 

on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at (202) 512-7118 or allenk@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix V. 

Kathryn G. Allen 

Director, Health Care 

Page 33 GAO-07-67 Hurricane Katrina and Medicaid
List of Congressional Committees

The Honorable Max Baucus 

Chairman 

The Honorable Charles E. Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

The Honorable John D. Dingell 

Chairman 

The Honorable Joe Barton 

Ranking Member 

Committee on Energy and Commerce 

House of Representatives 

The Honorable Henry A. Waxman 

Chairman 

The Honorable Tom Davis 

Ranking Member 

Committee on Oversight and Government Reform 

House of Representatives 

Page 34 GAO-07-67 Hurricane Katrina and Medicaid
Appendix I: Deficit Reduction Act of 2005 Appendix I: Deficit Reduction Act of 2005 Allocations to 32 States 

Allocations to 32 States 

Under the authority of the Deficit Reduction Act of 2005, the Centers for 

Medicare & Medicaid Services (CMS) allocated funding totaling 

approximately $1.9 billion to 32 states, as of September 30, 2006. The 

agency allocated funds to all 32 states for the time-limited Medicaid 

category of demonstration projects, to 8 of those 32 states for the timelimited uncompensated care category of demonstration projects, and to 

the 3 directly affected states—Alabama, Louisiana, and Mississippi—for 

the nonfederal share of expenditures for existing Medicaid and SCHIP 

beneficiaries. The 4 states selected for this study—Alabama, Louisiana, 

Mississippi, and Texas—received approximately 97.5 percent of the 

$1.9 billion allocation. All allocations were based on estimates states 

submitted for each of the funding categories in response to CMS’s 

July 2006 request for updated estimates. (See table 10.) 

Page 35 GAO-07-67 Hurricane Katrina and Medicaid
Appendix I: Deficit Reduction Act of 2005 

Allocations to 32 States 

Table 10: CMS’s Allocation of DRA Funds to States, Based on States’ Estimated Expenditures, as of September 30, 2006 

Allocations

State 

Category I 

Time-limited 

Medicaid and 

SCHIP 

servicesa,b,c 

Category II

Time-limited 

uncompensated

care servicesb,d

Category III

Existing 

Medicaid and 

SCHIP 

beneficiariese

Category IV 

Restore access 

to health caref

Total allocation

Percentage of

DRA 

allocation

Alabama $2,377,000 $4,660,000 $241,144,000 g $248,181,000 13.3

Arizona 713,000 0 h g713,000 0.0i

Arkansas 670,000 4,700,000 h g 5,370,000 0.3

California 1,514,000 0 h g1,514,000 0.1

Delaware 429,000 0 h g429,000 0.0i

District of Columbia 80,541 0 h g80,541 0.0i

Florida 2,871,000 0 h g2,871,000 0.2

Georgia 3,868,462 14,500,000 h g18,368,462 1.0

Idaho 44,000 0 h g44,000 0.0i

Indiana 368,332 0 h g368,332 0.0i

Iowa 240,000 0 h g240,000 0.0i

Louisiana 23,811 132,091,048 699,528,807 g 831,643,666 44.6

Maryland 701,000 0 h g701,000 0.0i

Massachusetts 629,000 0 h g629,000 0.0i

Minnesota 383,581 0 h g383,581 0.0i

Mississippi 1,815,572 75,264,730 518,482,628 g 595,562,930 32.0

Montana 25,000 0 h g 25,000 0.0i

Nevada 250,000 0 h g250,000 0.0i

North Carolina 493,415 0 h g493,415 0.0i

North Dakota 4,170 0 h g 4,170 0.0i

Ohio 404,000 0 h g404,000 0.0i

Oregon 67,000 0 h g67,000 0.0i

Pennsylvania 1,698,000 0 h g1,698,000 0.1

Puerto Rico 125,000 0 h g125,000 0.0i

Rhode Island 90,000 0 h g90,000 0.0i

South Carolina 1,088,000 124,000 h g1,212,000 0.1

Tennessee 1,850,467 5,678,000 h g7,528,467 0.4

Texas 76,872,000 65,336,000 h g142,208,000 7.6

Utah 275,000 0 h g275,000 0.0i

Virginia 1,249,000 0 h g1,249,000 0.1

Wisconsin 1,170,234 0 h g1,170,234 0.1

Page 36 GAO-07-67 Hurricane Katrina and Medicaid
Appendix I: Deficit Reduction Act of 2005 

Allocations to 32 States 

Allocations

State 

Category I 

Time-limited 

Medicaid and 

SCHIP 

servicesa,b,c 

Category II

Time-limited 

uncompensated

care servicesb,d

Category III

Existing 

Medicaid and 

SCHIP 

beneficiariese

Category IV 

Restore access 

to health caref Total allocation

Percentage of

DRA 

allocation

Wyoming 14,000 0 h g14,000 0.0i

Total $102,403,585 $302,353,778 $1,459,155,435 g $1,863,912,798 100.00j

Source: GAO analysis of CMS data. 

Note: This table accounts for the approximately $1.9 billion of DRA funds allocated to states. 

a

While states applied for and received approval to extend time-limited SCHIP coverage to individuals 

affected by Hurricane Katrina, no states actually enrolled individuals in SCHIP. 

b

Category I and Category II required CMS approval of a demonstration project under section 1115 of

the SSA. In addition to service expenditures, associated administrative costs are also included. 

c

DRA, Pub. L. No. 109-171, § 6201(a)(1)(A),(C), (a)(2), 120 Stat. 132-133. 

d

DRA, Pub. L. No. 109-171, § 6201(a)(1)(B),(D), (a)(2), 120 Stat. 132-133. 

e

DRA, Pub. L. No. 109-171, § 6201(a)(3), 120 Stat. 132-133. 

f

DRA, Pub. L. No. 109-171, § 6201(a)(4), 120 Stat. 132-133. 

g

CMS did not allocate funds to this category. 

h

State was not eligible for funding from this category. 

i

State’s percentage of DRA allocation is less than 0.10 percent. 

j

Numbers may not add to 100 percent due to rounding. 

Page 37 GAO-07-67 Hurricane Katrina and Medicaid
Appendix II: Comments from the Centers for Appendix II: Comments from the Centers for Medicare & Medicaid Services 

Medicare & Medicaid Services 

Page 38 GAO-07-67 Hurricane Katrina and Medicaid
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Page 39 GAO-07-67 Hurricane Katrina and Medicaid
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Now pages 1 and 2 

Now page 9 

Now page 9 

Now page 25

Page 40 GAO-07-67 Hurricane Katrina and Medicaid
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Page 41 GAO-07-67 Hurricane Katrina and Medicaid
Appendix II: Comments from the Centers for 

Medicare & Medicaid Services 

Now page 6 

Now page 21

Now page 26

Page 42 GAO-07-67 Hurricane Katrina and Medicaid
Appendix III: Comments from the State of Appendix III: Comments from the State of Louisiana Department of Health and Hospitals

Louisiana Department of Health and 

Hospitals 

Page 43 GAO-07-67 Hurricane Katrina and Medicaid
Appendix III: Comments from the State of 

Louisiana Department of Health and Hospitals

Page 44 GAO-07-67 Hurricane Katrina and Medicaid
Appendix III: Comments from the State of 

Louisiana Department of Health and Hospitals

Page 45 GAO-07-67 Hurricane Katrina and Medicaid
Appendix III: Comments from the State of 

Louisiana Department of Health and Hospitals

Page 46 GAO-07-67 Hurricane Katrina and Medicaid
Appendix III: Comments from the State of 

Louisiana Department of Health and Hospitals

Page 47 GAO-07-67 Hurricane Katrina and Medicaid
Appendix IV: Comments from the State of 

Texas Health and Human Services Appendix IV Commission : Comments from the State of 

Texas Health and Human Services 

Commission 

Page 48 GAO-07-67 Hurricane Katrina and Medicaid
Appendix IV: Comments from the State of 

Texas Health and Human Services

Commission

Page 49 GAO-07-67 Hurricane Katrina and Medicaid
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 50 GAO-07-67 

Appendix V: GAO Contact and Staff 

Acknowledgments 

Kathryn G. Allen (202) 512-7118 or allenk@gao.gov

In addition to the contact named above, Carolyn Yocom, Assistant 

Director; Jennie Apter; Laura M. Mervilde; JoAnn Martinez-Shriver; Sari B. 

Shuman; and Hemi Tewarson made key contributions to this report. 

GAO Contact 

Acknowledgments 

Hurricane Katrina and Medicaid
Related GAO Products Related GAO Products 

Hurricane Katrina: Status of Hospital Inpatient and Emergency 

Departments in the Greater New Orleans Area. GAO-06-1003. 

Washington, D.C.: September 29, 2006. 

Catastrophic Disasters: Enhanced Leadership, Capabilities, and 

Accountability Controls Will Improve the Effectiveness of the Nation’s 

Preparedness, Response, and Recovery System. GAO-06-618. Washington, 

D.C.: September 6, 2006. 

Hurricane Katrina: Status of the Health Care System in New Orleans 

and Difficult Decisions Related to Efforts to Rebuild It Approximately 6 

Months After Hurricane Katrina. GAO-06-576R. Washington, D.C.: 

March 28, 2006. 

Hurricane Katrina: GAO’s Preliminary Observations Regarding 

Preparedness, Response, and Recovery. GAO-06-442T. Washington, D.C.: 

March 8, 2006. 

Statement by Comptroller General David M. Walker on GAO’s 

Preliminary Observations Regarding Preparedness and Response to 

Hurricanes Katrina and Rita. GAO-06-365R. Washington, D.C.: 

February 1, 2006. 

(290539) Page 51 GAO-07-67 Hurricane Katrina and Medicaid
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER