Federal investigators fault CMS for poor oversight of Medicaid managed care contracts

"This report makes clear that we don’t have enough information to guarantee that prices are accurate and that Medicaid is protected," Finance Committee Chair Max Baucus (D-Mont.) said. "CMS has taken some steps to boost oversight, but this report makes clear that the agency needs to be more aggressive in its oversight of state contracts to ensure that care is coming at an accurate price. I intend to continue monitoring this issue to make sure that progress is being made and the Medicaid program is working effectively for Americans who need it.

CMS has already made some changes as a result of the GAO’s findings, according to the senators, including requiring all regional offices to use a checklist when reviewing state’s rate-setting submissions. But they say more needs to be done.

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"Medicaid could be overpaying in some cases and underpaying in others," said ranking member Chuck Grassley (R-Iowa). "CMS isn’t checking behind adequately to know either way. In a program that spends hundreds of billions of dollars, that’s a problem. Every dollar that goes to waste doesn’t help someone get healthcare. CMS needs to conduct much better oversight of the job states are doing with taxpayer dollars in the Medicaid program."

The report raises questions with Medicaid contracts in two states in particular. Tennessee received $5 billion a year in federal funds for rates that had not been certified by an actuary, as required by federal regulations, the report says. And in Nebraska the Centers for Medicare and Medicaid Services (CMS) did not complete a full review of rate setting since new requirements became effective, leaving doubts as to whether they are in compliance.