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

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.

Medicaid Program Integrity:

Increased Oversight Needed to Ensure Integrity of Growing Managed Care Expenditures
Published: May 19, 2014. Publicly Released: Jun 18, 2014.

Medicaid Demonstration Waivers:

Approval Process Raises Cost Concerns and Lacks Transparency
Published: Jun 25, 2013. Publicly Released: Jul 18, 2013.

Children's Mental Health:

Concerns Remain about Appropriate Services for Children in Medicaid and Foster Care
Published: Dec 10, 2012. Publicly Released: Jan 9, 2013.


More Transparency of and Accountability for Supplemental Payments Are Needed
Published: Nov 26, 2012. Publicly Released: Dec 21, 2012.

Medicaid Long-Term Care:

Information Obtained by States about Applicants' Assets Varies and May Be Insufficient
Published: Jul 26, 2012. Publicly Released: Aug 27, 2012.

More Reports

Disabled Dual-Eligible Beneficiaries:

Integration of Medicare and Medicaid Benefits May Not Lead to Expected Medicare Savings
Published: Aug 29, 2014. Publicly Released: Sep 29, 2014.

Contract Planning and Oversight Practices Were Ineffective Given the Challenges and Risks
Published: Jul 31, 2014. Publicly Released: Jul 30, 2014.

Ineffective Planning and Oversight Practices Underscore the Need for Improved Contract Management
Published: Jul 30, 2014. Publicly Released: Jul 30, 2014.


Medicare Program Integrity:

Increased Oversight and Guidance Could Improve Effectiveness and Efficiency of Postpayment Claims Reviews
Published: Jul 18, 2014. Publicly Released: Aug 13, 2014.

Medicare Fraud:

Further Actions Needed to Address Fraud, Waste, and Abuse
Published: Jun 25, 2014. Publicly Released: Jun 25, 2014.

Medicare Fraud:

Progress Made, but More Action Needed to Address Medicare Fraud, Waste, and Abuse
Published: Apr 30, 2014. Publicly Released: Apr 30, 2014.

Medicare Program Integrity:

Contractors Reported Generating Savings, but CMS Could Improve Its Oversight
Published: Oct 25, 2013. Publicly Released: Nov 25, 2013.

Health Care Fraud and Abuse Control Program:

Medicare Program Integrity:

Increasing Consistency of Contractor Requirements May Improve Administrative Efficiency
Published: Jul 23, 2013. Publicly Released: Aug 22, 2013.
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