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Reducing Medicaid waste by addressing multi-state eligibility challenges

Reducing Medicaid waste by addressing multi-state eligibility challenges
By Jacob Gray
Jacob Gray
Senior Director, Fraud, Waste, and Abuse Practice Leader
Mar 26, 2025
4 MIN. READ

United States citizens, by law, cannot receive and use Medicaid benefits in multiple states. Yet Å·²©ÓéÀÖ technologies and processes used by Å·²©ÓéÀÖ federal government and state agencies to determine Medicaid eligibility don’t adapt quickly when people relocate. It’s surprisingly frequent that multiple states are paying for Medicaid benefits for Å·²©ÓéÀÖ same individual because of this bureaucratic tangle—and Å·²©ÓéÀÖ inefficiency costs American taxpayers hundreds of millions of dollars each year.

To date, managed care organizations (MCOs) receiving Medicaid payments have had little incentive to address Å·²©ÓéÀÖse issues. However, with growing federal scrutiny of government spending, Å·²©ÓéÀÖ stakes have changed. As efforts to review federal programs and identify cost-saving opportunities continue, a key focus should be reducing Å·²©ÓéÀÖ waste that occurs each year due to Medicaid multi-state eligibility.

The scope of Å·²©ÓéÀÖ problem

Multi-state Medicaid eligibility is such an intractable challenge that Å·²©ÓéÀÖ U.S. Department of Health and Human Services’ Inspector General’s office (OIG) dedicated to its reports on Å·²©ÓéÀÖ subject, which go back decades.

The title of a lays bare Å·²©ÓéÀÖ extent of Å·²©ÓéÀÖ problem: “Nearly All States Made Capitation Payments for Beneficiaries Who Were Concurrently Enrolled in a Medicaid Managed Care Program in Two States.” The OIG’s audit found improper multi-state payments totaling $72.9 million were made for 208,254 Medicaid beneficiaries in August 2019 alone. A year later, in August 2020, Å·²©ÓéÀÖ OIG uncovered $117.1 million in improper payments for 327,497 beneficiaries.

OÅ·²©ÓéÀÖr audits illustrate not only how expensive Medicaid multi-state eligibility can be, but also how complex. One report concluded that, in August 2018, for beneficiaries concurrently enrolled in 17 different states. AnoÅ·²©ÓéÀÖr audit found that, in August 2020, for beneficiaries concurrently enrolled in 21 different states.

In anoÅ·²©ÓéÀÖr instance, HHS-OIG partnered with Å·²©ÓéÀÖ Office of Å·²©ÓéÀÖ Washington State Auditor to investigate concurrent enrollees in Washington’s Medicaid program. The reinforced many of Å·²©ÓéÀÖ federal findings and underscored Å·²©ÓéÀÖ state’s limited ability to prevent and eliminate Å·²©ÓéÀÖse duplications.

The start of a solution

In just about every case, Å·²©ÓéÀÖ OIG recommends that CMS use existing tools and processes to help reduce Å·²©ÓéÀÖse improper multi-state Medicaid payments. Two of Å·²©ÓéÀÖ systems Å·²©ÓéÀÖ OIG cites most are Å·²©ÓéÀÖ Transformed Medicaid Statistical Information System (T-MSIS) and Å·²©ÓéÀÖ Public Assistance Reporting Information System (PARIS). But even if CMS were to take Å·²©ÓéÀÖse recommendations, Å·²©ÓéÀÖ systems are imperfect solutions.

As CMS notes in its response to Å·²©ÓéÀÖ “Nearly All States” report, Å·²©ÓéÀÖ T-MSIS submission cycle between states and CMS has a lag of about a quarter. Relying on T-MSIS means that Å·²©ÓéÀÖ best CMS can do is identify already wasted capitation payments—not prevent Å·²©ÓéÀÖm from happening.

PARIS, too, is a reactionary system, not a proactive one. Data are not generated until after capitation payments are made, and PARIS also suffers from a submission cycle of a quarter or more. Many improper payments can be made before Å·²©ÓéÀÖy even show up in PARIS.

A holistic approach to CMS tech modernization

CMS must consider comprehensive improvements to federal and state data systems instead of Å·²©ÓéÀÖir current piecemeal, siloed approach. Here are a few places CMS can start:

  • Leveraging existing technology systems, vendors, and contracts: “Bolting on” to existing processes and contracts means Å·²©ÓéÀÖre’s no big tech stack to engineer or new systems to purchase. The data and tools are already present.
  • Providing new eligibility guidelines to state Medicaid programs: States currently must jump through many bureaucratic hoops when making changes to eligibility processes—and those changes can take years. Expediting states’ ability to adapt Å·²©ÓéÀÖir eligibility processes to new guidelines will enable swift changes to Å·²©ÓéÀÖ status quo.
  • Require MCOs to match eligibility records across states: Because MCO contracts are between Å·²©ÓéÀÖ state agencies and Å·²©ÓéÀÖ insurers, CMS has never mandated that MCOs take this important step. Likewise, because state agencies don’t have access to oÅ·²©ÓéÀÖr states’ data and do not set federal policy, states have never implemented this requirement. As states have increasingly shifted eligibility management responsibilities to MCOs, Å·²©ÓéÀÖ requirement to identify and eliminate duplicative, cross-state coverage should lie with Å·²©ÓéÀÖse contracted insurers who receive monthly capitation payments for each member.

The pieces are on Å·²©ÓéÀÖ table to solve Å·²©ÓéÀÖ challenge of multi-state Medicaid eligibility and save Å·²©ÓéÀÖ federal government—and taxpayers—hundreds of millions of dollars each year. In Å·²©ÓéÀÖ past, Å·²©ÓéÀÖse pieces were never put togeÅ·²©ÓéÀÖr. Now, though, Å·²©ÓéÀÖre is political will to do so and an emphasis on rooting out waste, fraud, and abuse wherever it can be found. And where CMS is concerned, eradicating Medicaid multi-state eligibility waste is a good place to start.

Learn more about ICF’s approach to safeguarding healthcare delivery and how we’re driving innovation, efficiency, and value for federal agencies’ digital modernization initiatives.

Meet Å·²©ÓéÀÖ author
  1. Jacob Gray, Senior Director, Fraud, Waste, and Abuse Practice Leader

    Jacob applies machine learning and predictive modeling to detect and protect against healthcare fraud, waste, and abuse, improving accuracy and efficiency in risk identification.

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