Managed Care in Medicaid — Need for Oversight, Accountability, and Reform

In September 2022 the Office of the Inspector General (OIG) at the Department of Health and Human Services (HHS) issued a scathing report that states are failing to require essential reporting by Medicaid managed care organizations (MCOs). Consequently, the Centers for Medicare and Medicaid Services (CMS) does not know how hundreds of billions of Medicaid money is being spent by insurers nor how much value recipients and taxpayers are getting for the massive amount of spending through Medicaid.

Unfortunately, these problems are not surprising. States lack incentives to ensure value from Medicaid. The federal government typically pays about 65 percent of Medicaid’s costs with no cap on federal expenditures. Because of COVID-related Medicaid policies, the federal government now reimburses about 70 percent of program expenditures. Meanwhile, CMS has never prioritized Medicaid program integrity.

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