States pay consultants to find ways to procure Medicaid funds

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At least 34 states last year paid consultants to help them receiver larger Medicaid reimbursements, often with questionable practices, according to a study from the Government Accountability Office.

The consultants, who are paid a share of the money they procure for states, often recommended financial tactics that violate a federal law or policy. These practices can drive up federal Medicaid costs.

Because of a lack of oversight from CMS, states have developed new financing methods that are ultimately hurting the Medicaid system, according to Kathryn Allen, director of healthcare issues for GAO. Federal officials also used different standards for different states so some states used techniques forbidden to others.

Congressmen expressed strong reactions to the study. "Medicaid dollars should not be lining the pockets of consultants who plot new ways to exploit the system," said Senate Finance Committee Chair Chuck Grassley (R-IA), who requested the GAO study. Grassley said he will send letters to all 50 governors demanding information on consultant use.