Enhancing Medicaid Payment Oversight

GAO has reported for years on areas of high risk of improper payments, including claims for federal Medicaid reimbursement stemming from states' contingency-fee contracts. In 2005, GAO reported that a growing number of states were using contingency-fee consultants—consultants employed under contracts whereby payment to the contractor was contingent upon the consultant's performance—to maximize federal Medicaid reimbursement. In two states reviewed, GAO identified contingency-fee projects that had increased federal Medicaid reimbursement by more than an estimated $2 billion during fiscal years 2000 through 2004. GAO recommended that Centers for Medicare & Medicaid Services (CMS) improve its oversight of contingency-fee projects and states' reimbursement-maximizing methods. CMS indicated it did not have authority to require states to disclose their use of contingency-fee consultants, and according to the agency, legislation was sought but not enacted to specifically address this issue. Improved CMS oversight of projects involving contingency-fee consultants could help reduce the federal government's liability for Medicaid.

For more information on the improper payments across government, please see Reducing Federal Improper Payments

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Medicaid Financing: States' Use of Contingency-Fee Consultants to Maximize Federal Reimbursements Highlights Need for Improved Federal Oversight

GAO-05-748, June 28, 2005

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