	Background

Medicaid finances the delivery of health care services for a diverse low- income and medically needy population. Medicaid Eligibility, Enrollment, Services, and Expenditures

Historically, Medicaid eligibility has been limited to certain categories of  low-income individuals—such as children, parents, pregnant women,  persons with disabilities, and individuals age 65 and older. Key Issues Facing the Medicaid Program

		Maintaining and Improving Access to Quality Care

Medicaid enrollees report access to medical care that is generally  comparable to that of privately insured individuals. We continue to believe that our recommendation is valid. However, a lack  of reliable CMS data about program payments and state financing of the  non-federal share of Medicaid hinders oversight, and our work has  pointed to the need for better data, as well as improved policy and   oversight, to ensure that funds are being used appropriately and  efficiently. In addition, gaps in HHS’s criteria, process, and policy for  approving states’ demonstration spending raise questions about billions  of dollars in federal spending. Improving HHS’s review and approval  process for demonstration spending may  prevent unnecessary federal spending. Medicaid improper  payments are a significant cost to Medicaid—totaling an estimated   $17.5 billion in fiscal year 2014, according to HHS. Due to our concerns  about Medicaid’s improper payment rate and the sufficiency of federal  and state oversight, we added Medicaid to our list of high-risk programs in  2003.appropriate use of funds by (1) identifying and preventing improper  payments in both fee-for-service and managed care, (2) setting  appropriate payment rates for managed care organizations, and   (3) ensuring only eligible individuals and providers participate in Medicaid. CMS concurred with  these recommendations. Improving the  responsiveness of federal assistance to states during economic  downturns would facilitate state budget planning, provide states with  greater fiscal stability, and better align federal assistance with the  magnitude of the economic downturn’s effects on individual states. Targeted assistance based on state needs. Based on our work, we noted that Congress could consider enacting an  FMAP formula that is targeted for variable state Medicaid needs and  provides automatic, timely, and temporary increased FMAP assistance in  response to national economic downturns. More Equitable Funding Formula Would Better Reflect States’ Varying Ability to Fund Medicaid

In prior work spanning more than three decades, we have emphasized  that in federal-state programs such as Medicaid, funds should be  allocated to states in a manner that is equitable from the perspective of  both enrollees and taxpayers. Medicaid’s Ongoing Transformation Highlights the Importance of Federal Oversight

We have reported over the years on challenges facing the Medicaid  program and concerns about the adequacy of federal oversight. The effects of changes  brought on by PPACA, as well as the aging of the U.S. population, will  continue to emerge in the coming years and are likely to exacerbate the  challenges that already exist in federal oversight and management of the  Medicaid program.delivery and payment approaches, as well as new technologies, will  continue to pose challenges to federal oversight and management. Recent state efforts to explore new health care models have  implications for federal oversight of enrollees’ care and program  costs. Attention to Medicaid’s transformation and the key issues facing the  program will be important to ensuring that Medicaid is both effective for  the enrollees who rely on it and accountable to the taxpayers. GAO has  multiple ongoing studies in these areas and will continue to monitor the  Medicaid program for the Congress. Agency Comments

We provided a draft of this report to HHS for review. HHS provided  technical comments, which we incorporated as appropriate. The following table lists selected Medicaid-related recommendations  GAO has made to the Department of Health and Human Services that are  classified as open because the agency has either not taken or has not  completed steps to implement the recommendation. The  recommendations are listed by key issue and report. Washington, D.C.: January 30, 2015. Program Integrity: Further Action Needed to Address Vulnerabilities in  Medicaid and Medicare Programs. Other GAO Products

Medicaid: Overview of Key Issues Facing the Program.
Why GAO Did This Study

The Medicaid program marks its 50th anniversary on July 30, 2015. The joint federal-state program has grown to be one of the largest sources of health care coverage and financing for a diverse low-income and medically needy population. Medicaid is undergoing transformative changes, in part due to PPACA, which expanded the program by allowing states to opt to cover low-income adults in addition to individuals in historic categories, such as children, pregnant women, older adults, and individuals with disabilities.
GAO has a large body of work on challenges facing Medicaid and gaps in federal oversight. This report describes (1) key issues that face the Medicaid program based on this work, and (2) program and other changes with implications for federal oversight. GAO reviewed its reports on Medicaid issued from January 2005 through July 2015; reviewed documentation from the Centers for Medicare & Medicaid Services (CMS), the HHS agency that oversees Medicaid; and interviewed CMS officials.

What GAO Found

GAO identified four key issues facing the Medicaid program, based on prior work.
Access to care : Medicaid enrollees report access to care that is generally comparable to that of privately insured individuals and better than that of uninsured individuals, but may have greater health care needs and greater difficulty accessing specialty and dental care.
Transparency and oversight : The lack of complete and reliable data on states' spending—including provider payments and state financing of the non-federal share of Medicaid—hinders federal oversight, and GAO has recommended steps to improve the data on and scrutiny of states' spending. Also, improvements in the Department of Health and Human Services' (HHS) criteria, policy, and process for approving states' spending on demonstrations—state projects that may test new ways to deliver or pay for care—are needed to potentially prevent billions of dollars in unnecessary federal spending, as GAO previously recommended.
Program integrity : The program's size and diversity make it vulnerable to improper payments. Improper payments, such as payments for non-covered services, totaled an estimated $17.5 billion in fiscal year 2014, according to HHS. An effective federal-state partnership is key to ensuring the most appropriate use of funds by, among other things, (1) setting appropriate payment rates for managed care organizations, and (2) ensuring only eligible individuals and providers participate in Medicaid.
Federal financing approach : Automatic federal assistance during economic downturns and more equitable federal allocations of Medicaid funds to states (by better accounting for states' ability to fund Medicaid) could better align federal funding with states' needs, offering states greater fiscal stability. GAO has suggested that Congress could consider enacting a funding formula that provides automatic, timely, and temporary increased assistance in response to national economic downturns.
Medicaid's ongoing transformation—due to the Patient Protection and Affordable Care Act (PPACA), the aging of the U.S. population, and other changes to state programs—highlights the importance of federal oversight, given the implications for enrollees and program costs. Attention to Medicaid's transformation and the key issues facing the program will be important to ensuring that Medicaid is both effective for the enrollees who rely on it and accountable to the taxpayers. GAO has multiple ongoing studies in these areas and will continue to monitor the Medicaid program for the Congress.

What GAO Recommends

GAO has made over 80 recommendations regarding Medicaid, some of which HHS has implemented. GAO has highlighted 24 key recommendations that have not been implemented. HHS agreed with and is acting on some and did not agree with others. GAO continues to believe that all of its recommendations have merit and should be implemented. HHS provided technical comments on a draft of this report, which GAO incorporated as appropriate.