Key Issues > Medicaid Financing, Access, and Integrity
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Medicaid Financing, Access, and Integrity

Medicaid plays an important role in providing health care coverage for over 60 million low-income people, including children, parents and individuals who are aged or disabled. The program is jointly financed by the federal government and the states and costs more than $400 billion a year.  Under the Patient Protection and Affordable Care Act, federal expenditures are expected to increase significantly as millions of additional individuals gained Medicaid coverage during 2014.

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The Department of Health and Human Services Centers for Medicare & Medicaid Services (CMS), the agency that oversees the program at the federal level, faces many challenges in overseeing payments and ensuring that children covered by Medicaid receive needed services. Because of concerns about inadequate federal oversight of the large and growing program, Medicaid has been designated as high risk.

  • CMS has not developed an effective program integrity strategy to identify and prevent fraud, waste, and abuse, despite estimated improper payments totaling more than $14 billion a year in federal funds.

Figure 1: Number of Audits and Potential NMAP Overpayments and through February 2012

Number of Audits and Potential NMAP Overpayments and through February 2012

  • Medicaid is the largest payer of long-term care and these services comprise over one-quarter of the total Medicaid expenditures. Variation in statesÂ’ policies and practices raises questions regarding how states determine Medicaid eligibility for long-term care and implement federal requirements to ensure that only eligible individuals receive Medicaid coverage.

Figure 2: Percentage of Nationwide Spending on Long-Term Care Services, by Payment Source (2009)

Percentage of Nationwide Spending on Long-Term Care Services, by Payment Source (2009)

  • Children in Medicaid took psychotropic medications at a higher rate than those with private insurance; and most children in Medicaid with a potential mental health need did not receive services.  Specifically, about 14 percent of children in Medicaid had a potential need for mental health services, and over two-thirds of them did not receive any services.

Figure 3: Percentages of Medicaid Children with a Potential Mental Health Need that Did Not Receive Certain Mental Health Services in a Calendar Year 2007-2009

Percentages of Medicaid Children with a Potential Mental Health Need that Did Not Receive Certain Mental Health Services in a Calendar Year 2007-2009

  • Gaps remain in federal oversight of supplemental Medicaid payments that states often make to certain providers as lump sum payments that are not based on claims for specific services.  Analysis of limited hospital specific payment data showed that, in 2007, 39 states made Medicaid payments to 505 hospitals that exceeded the hospitals’ total costs of providing Medicaid services by a total of about $2.7 billion.  Medicaid payments that greatly exceed hospitals’ costs raise questions, for example, as to whether payments are being used for Medicaid.

Figure 4: Amount by Which Medicaid Payments to Disproportionate Share Hospital (DSH) Hospitals Exceeded Medicaid Costs in 2007, by State

Figure 4: Number and Percentage of Disproportionate Share Hospital (DSH) Hospitals That Received Regular Medicaid and Non-DSH Supplemental Payments in Excess of Medicaid Costs, and Amounts by Which Payments Exceeded Costs, by State

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