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GAO Report on State Medicaid Administration Challenges

A new Government Accountability Office (GAO) report details challenges states face to administering Medicaid programs.

To compile this report, requested by Reps. Greg Walden (R-OR) and Michael Burgess, MD (R-TX), GAO asked state Medicaid agencies and other stakeholders to assess and identify challenges with federal Medicaid policies, as well as opportunities to improve the efficiency and effectiveness.

In interviews with Medicaid officials from all 50 states and Washington, D.C., states identified several challenges, including:

  • Coverage Exclusions and Care Coordination. Almost all states identified the Medicaid institutions for mental disease (IMD) exclusion as challenging because it limits their ability to provide the full spectrum of care for patients with complex health care needs, especially those with mental illness or substance use disorders. States acknowledged that using Medicaid managed care or Section 1115 demonstration waiver authority to extend IMD coverage was beneficial, but noted limitations and administrative burden with these options;
  • Coverage Benefits and Eligibility. Most states identified challenges related to outpatient prescription drug coverage, noting that newer drugs often are high cost and might not yet have an established clinical benefit. Some states suggested CMS should amend requirements to allow states to cover fewer drugs or delay coverage until clinical effectiveness is proven; and
  • Medicare and Medicaid Alignment. The majority of states face challenges with integrating care for beneficiaries dually eligible for Medicare and Medicaid  because of policy differences in the programs. States suggest CMS better align policies between the two programs to allow better integration of care for these beneficiaries.

States also reported challenges with federally qualified health center and rural health clinic payment methodologies; the process to gain approval for Medicaid demonstration waivers; data reporting; and administrative burden.

GAO suggests federal action to address these challenges, such as:

  • targeting oversight to critical areas to ensure beneficiary access and quality of care;
  • leveraging Medicaid data; and
  • balancing federal oversight with state flexibility.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Abigail Painchaud is a policy associate at America's Essential Hospitals.

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