Enhancing Medicaid Oversight

CMS has taken steps to improve the fiscal and management oversight of Medicaid; however, oversight of the state-administered program remains insufficient given its size, growth, and diversity.

• Lack of oversight has resulted in excessive federal spending in several areas and was one of the reasons GAO added Medicaid to its list of high-risk programs in 2003. GAO continues to report concerns with improper Medicaid payments. For example, GAO identified tens of thousands of Medicaid beneficiaries and providers involved in potentially fraudulent, wasteful, and abusive purchases of controlled substances in states that lacked a comprehensive framework to prevent fraud and abuse of controlled substances
  

  Highlights of GAO-07-310 (PDF), Highlights of GAO-09-957 (PDF)

• CMS continues to approve waivers to allow state Medicaid programs to operate demonstration programs that increase the federal government's potential financial liability substantially, despite a long-standing policy that demonstrations should be budget neutral to the federal government.
  

  Highlights of GAO-08-87 (PDF)

• In addition, CMS needs to further improve its oversight of Medicaid supplemental payments — payments separate from and in addition to those made at a state's standard payment rate — and the actuarial soundness of states' managed care rates. While CMS's oversight of Medicaid supplemental payment arrangements has improved since the agency took steps to closely review states' payment arrangements starting in 2003, the agency has not reviewed all payment arrangements, has not collected all of the information it needs to adequately oversee the supplemental payments made to states, and has sometimes calculated the supplemental payments incorrectly. In addition, CMS has been inconsistent in reviewing states' rate setting for compliance with the Medicaid managed care actuarial soundness requirements, which specify that rates must be developed in accordance with actuarial principles, appropriate for the population and services, and certified by actuaries. Variation in a number of CMS regional office practices contributed to significant gaps and other inconsistencies in the agency's oversight of states' rate setting. For example, CMS had not completed a full review of Nebraska's rate setting since the actuarial soundness requirements became effective, and therefore may have provided federal funds for rates that were not in compliance with all of the requirements.
  

  Highlights of GAO-08-614 (PDF), GAO-10-69 (PDF), and GAO-10-810 (PDF)

^ Back to topWhat Needs to Be Done

Further action should be taken by Congress and CMS to enhance oversight of the Medicaid program. Specifically, Congress should consider requiring increased attention to fiscal responsibility in the approval of section 1115 Medicaid demonstrations by requiring the Secretary of HHS to improve the demonstration review process.

Highlights of GAO-08-87 (PDF)

In addition, to improve the oversight of Medicaid, the Administrator of CMS should

• issue guidance to states to better prevent fraud of controlled substances in Medicaid;
  

  Highlights of GAO-09-957 (PDF)

• develop a strategy to identify all supplemental payment programs and to review those programs not previously subject to CMS review under its oversight initiative begun in 2003;
  

  Highlights of GAO-08-614 (PDF)

• ensure that states account for all Medicaid payments, including non-DSH supplemental payments, when calculating DSH payment limits; and

  Highlights of GAO-10-69 (PDF)

• implement a mechanism to track state compliance with the managed care rate-setting requirements, clarify guidance on rate-setting reviews, and make use of information on data quality in overseeing states' rate setting.

  Highlights of GAO-10-810 (PDF)

^ Back to topKey Reports

Medicaid

Medicaid Managed Care

Medicaid

Medicaid Demonstration Waivers

Medicaid

Export Promotion

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