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 $450 billion a year.  Under the Patient Protection and Affordable Care Act, federal expenditures are expected to increase significantly as 18 million additional individuals are estimated to gain Medicaid coverage by 2022.

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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 $17 billion a year in federal funds in 2014. For example, GAO identified a gap in state and federal efforts to ensure Medicaid managed care program integrity, despite the fact that managed care is growing at a faster rate than fee-for-service payments.   In addition, approximately 13 percent of Medicaid enrollees had private health insurance.  While private insurers should pay before Medicaid does, there are challenges with ensuring this happens.

Figure 1: Estimated Prevalence of Private Health Insurance among Medicaid Enrollees by Eligibility Category, 2012

Figure 1: Estimated Prevalence of Private Health Insurance among Medicaid Enrollees by Eligibility Category, 2012

  • Medicaid is the largest payer of long-term care and these services comprise over one-quarter of the total Medicaid expenditures. Federal law includes provisions to discourage individuals with significant resources from reducing their countable assets in order to establish financial eligibility for Medicaid nursing home coverage. However, methods exist through which individuals, sometimes with the help of attorneys, can reduce their countable assets and qualify for Medicaid nursing home coverage.

Figure 2: Distribution of Approved Applicants in Selected Counties in Three States by Amount of Total Resources (n=294)

Figure 2: Distribution of Approved Applicants in Selected Counties in Three States by Amount of Total Resources (n=294)

  • 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

  • States have increasingly relied on funds from sources other than state general funds to finance the non-federal share of their programs, such as health care provider taxes and funds transferred from local governments and local government health care providers. Although such sources are allowed under certain circumstances, they can create incentives for states to overpay providers that contribute funds to the state for the non-federal share in order to reduce state obligations, and can result in cost shifts to the federal government.

Figure 4: Amount of the Nonfederal Share of Medicaid Payments from Health Care Providers and Local Governments, State Fiscal Years 2008 through 2012

Figure 4: Amount of the Nonfederal Share of Medicaid Payments from Health Care Providers and Local Governments, State Fiscal Years 2008 through 2012

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.
Medicaid: CMS Should Ensure That States Clearly Report Overpayments
http://gao.gov/products/GAO-14-25

GAO-14-25: Published: Dec 6, 2013. Publicly Released: Dec 6, 2013.
Medicaid: Data Sets Provide Inconsistent Picture of Expenditures
http://gao.gov/products/GAO-13-47

GAO-13-47: Published: Oct 29, 2012. Publicly Released: Nov 29, 2012.

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