Summary

GAO reviewed the Medicaid Management Information System (MMIS) to follow up on actions taken by the Department of Health and Human Services (HHS) to implement prior GAO recommendations. On the federal level, MMIS is administered by the Health Care Financing Administration (HCFA).

The newly designed Systems Performance Review, which contains the performance standards developed in response to revised statutory requirements that approved systems must meet, has been successful in identifying some program weaknesses. While the performance standards include measures of system effectiveness and efficiency, economy of operations, a major purpose of MMIS, is not measured. Thus, HHS does not know whether states' systems are meeting standards at a reasonable cost. HCFA recognizes the need to evaluate operational economy, but it has deferred action on this, anticipating that HHS will require states to implement a functional cost reporting system to ensure accurate and comparable cost data. Current performance standards do not include any measures of the states' effectiveness in identifying and correcting program misutilization by Medicaid providers and recipients or the contributions of the surveillance and utilization review subsystem (SURS) to that activity. GAO found that states were having problems with the SURS methodology which affected the subsystem accuracy in identifying potential misusers. Also, states: (1) were underreporting systems operating costs; and (2) had proceeded with automatic data processing (ADP) equipment or services purchases without obtaining prior HHS approval. HHS regulations require states to obtain prior HHS approval before purchasing ADP equipment and services exceeding certain dollar limits, but HCFA requires states to follow this procedure only when they desire 90-percent federal funding.