United States Government Accountability Office

GAO Report to the Chairman, Committee on

Finance, U.S. Senate 

MEDICAID 

FINANCING 

States’ Use of 

Contingency-Fee 

Consultants to 

Maximize Federal

Reimbursements 

Highlights Need for 

Improved Federal 

Oversight 

June 2005 

 

GAO-05-748 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2005

MEDICAID FINANCING

States’ Use of Contingency-Fee 

Consultants to Maximize Federal 

Reimbursements Highlights Need for

Improved Federal Oversight

Highlights of GAO-05-748, a report to the

Chairman, Committee on Finance, U.S.

Senate 

Medicaid—the federal-state health

care financing program covering 

nearly 54 million low-income

people at a cost of $276 billion in 

fiscal year 2003—is by its size and

structure at risk of waste and

exploitation. Because of challenges 

inherent in overseeing the program, 

administered federally by the 

Centers for Medicare & Medicaid

Services (CMS), GAO in 2003 added

Medicaid to its list of high-risk 

federal programs. To help 

administer the program, states may 

employ consultants in a number of

roles, sometimes under contracts 

whereby payment is contingent 

upon the consultant’s performance.

GAO was asked to report on states’ 

use of contingency-fee consultants. 

GAO examined the extent to which

(1) states are using contingency-fee

consultants for projects to

maximize federal Medicaid 

reimbursements, (2) claims from 

contingency-fee projects in

selected states are consistent with

federal law and policy, and 

(3) states and CMS are overseeing

claims from such projects. 

What GAO Recommends

GAO recommends that CMS

improve oversight of contingencyfee projects and states’

reimbursement-maximizing

methods. In comments, CMS said 

its initiatives substantially respond 

to the recommendations, and the 

states said that their projects 

comply with law. GAO maintains 

that additional actions are needed. 

As of 2004, 34 states—up from 10 states in 2002—used contingency-fee 

consultants to implement projects to maximize federal Medicaid 

reimbursements. Projects varied widely, and because of certain risk

factors—including a nationwide growth in dollars—GAO focused on claims 

in five categories (see table). Contingency-fee consultants in the 2 states 

GAO reviewed, Georgia and Massachusetts, have developed projects in all

five categories. From these and other projects, for state fiscal years 2000

through 2004, Georgia obtained an estimated $1.5 billion in additional federal

reimbursements and Massachusetts obtained an estimated $570 million. 

These states paid contingency fees of more than $90 million. 

In Georgia, Massachusetts, or both states, GAO identified claims from 

contingency-fee projects in the five categories reviewed that were

problematic because they appeared to be inconsistent with current policy or 

were inconsistent with federal law; others undermined Medicaid’s fiscal

integrity. For example, for services provided to children in state custody 

residing in private facilities, a Georgia project claimed increased federal

Medicaid reimbursements on the basis of the facilities’ estimated costs,

which were often higher than the state’s actual payments to the facilities. 

Problematic projects often involved categories of claims where federal law 

and policy were inconsistently applied, evolving, or not specific. Problematic

projects also involved Medicaid payments to government entities, which can

facilitate the inappropriate shifting of state costs to the federal government. 

The states and CMS have provided limited oversight of claims associated 

with contingency-fee projects. CMS has not routinely collected information 

enabling it to identify claims or projects developed by contingency-fee 

consultants to maximize federal reimbursements, despite long-standing 

recognition that such claims are at risk of being inconsistent with federal

requirements. Problems GAO identified illustrate the urgent need to address 

broader issues in oversight and financial management. CMS has taken steps

to strengthen its financial oversight of Medicaid, but the agency can do more 

to reduce the risk of current and emerging financing schemes, including

responding to prior GAO recommendations. 

Five Categories of Medicaid Claims Reviewed by GAO 

Category of claims Service 

Targeted case

management services

Services to help a defined group of beneficiaries gain access to

needed medical, social, educational, and other services

Rehabilitation services Services to reduce a mental or physical disability and restore an 

individual to the best possible functional level 

Supplemental payment

arrangements

Payments to a class of health care providers, such as nursing homes,

up to a predefined limit

School-based services Medicaid-covered medical services provided by schools, such as 

diagnostic screening or physical therapy, or the administrative cost of

providing these services

Administrative costs Costs the states incur in administering their Medicaid programs

Source: GAO based on CMS information. 

www.gao.gov/cgi-bin/getrpt?GAO-05-748.

To view the full product, including the scope 

and methodology, click on the link above.

For more information, contact Kathryn G. 

Allen at (202) 512-7118.
Contents 

Letter 1

Results in Brief 4 

Background 7

Most States Have Employed Contingency-Fee Consultants in a 

Wide Range of Reimbursement-Maximizing Projects 12 

Claims from Contingency-Fee Projects Are Not Always Consistent

with Law or Current Policy and Can Undermine Medicaid’s 

Fiscal Integrity 18 

Limited State and CMS Oversight of Claims from Contingency-Fee

Projects Raises Concerns about Medicaid Financial Management 33 

Conclusions 43

Recommendations for Executive Action 45 

Agency and State Comments and Our Evaluation 46 

Appendix I Description of Contingency-Fee Projects Referred 

for Additional Review 52 

Appendix II Summary of Selected HHS OIG Reports on 

School-Based Claims in States Employing 

Consultants 55 

Appendix III Comments from the Centers for Medicare & Medicaid 

Services 56 

Appendix IV Comments from the State of Georgia and GAO’s 

Response 67 

Appendix V Comments from the Commonwealth of Massachusetts

and GAO’s Response 73 

Appendix VI GAO Contact and Staff Acknowledgments 91 

Page i GAO-05-748 Medicaid Contingency-Fee Consultants
Related GAO Products 92 

Tables 

Table 1: Five Categories of Medicaid Claims Reviewed by GAO 4 

Table 2: CMS’s 2004 Survey Results Showing Categories of 

Medicaid Claims in Which States Had Projects Developed 

with Contingency-Fee Consultants, January 1999–June 

2004 13 

Table 3: Five Categories of Medicaid Claims Where ContingencyFee Consultants Are Helping States Maximize Federal

Medicaid Reimbursements 14 

Table 4: Selected States’ Consultant Projects Leading to Improper

School-Based Medicaid Claims, as Reported by HHS OIG 55 

Figures 

Figure 1: The Typical Medicaid Payment Process 9 

Figure 2: Georgia’s UPL Arrangement with Local-Government

Health Care Providers, State Fiscal Years 2001–2003 25 

Page ii GAO-05-748 Medicaid Contingency-Fee Consultants
Abbreviations 

CMS Centers for Medicare & Medicaid Services 

DSH disproportionate share hospital

HCFA Health Care Financing Administration 

HHS Department of Health and Human Services

OIG Office of Inspector General 

OMB Office of Management and Budget

TCM targeted case management 

UMMS University of Massachusetts Medical School

UPL upper payment limit

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Page iii GAO-05-748 Medicaid Contingency-Fee Consultants
United States Government Accountability Office

Washington, DC 20548 

 

June 28, 2005 

The Honorable Charles E. Grassley 

Chairman 

Committee on Finance 

United States Senate 

Dear Mr. Chairman: 

Medicaid—the federal-state program financing health care for certain lowincome children, families, and individuals who are aged or disabled—

covered almost 54 million people at an estimated cost of $276 billion in 

federal fiscal year 2003. By a formula established in law, the federal 

government paid from 50 to 77 percent of each state’s reported Medicaid 

expenditures that fiscal year.1

 We have previously reported that the 

challenges inherent in overseeing a program of Medicaid’s size, growth, 

and diversity put the program at high risk for waste, abuse, and 

exploitation and led us in 2003 to add Medicaid to our list of high-risk 

federal programs.

2

 Medicaid has long been subject to states’ seeking to 

maximize federal reimbursement. Within broad federal guidelines, states

administer their Medicaid programs by paying qualified health providers 

for a range of covered services provided to eligible beneficiaries and then 

seeking reimbursement for the federal share of those payments. States 

may employ consultants to serve a number of valid Medicaid-related roles, 

such as adding needed staff or a particular expertise, and these 

consultants may save both the federal government and states money by, 

for example, identifying when claims were paid inappropriately and are 

subject to recovery. Some consultants may serve under contingency-fee 

contracts, whereby a consultant’s fee is based, or contingent, upon 

performance, and these contingency fees are not eligible for federal 

 1

States with lower per capita incomes receive higher federal matching rates. The federal

government also matches states’ costs for administering the Medicaid program, generally at

50 percent. Federal Medicaid matching rates were increased temporarily by 2.95

percentage points from April 1, 2003, through June 30, 2004, pursuant to title IV of the Jobs

and Growth Tax Relief Reconciliation Act of 2003. See Pub. L. No. 108-27, § 401(a)(3), 117

Stat. 752, 764–765. 

2

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).
Medicaid reimbursement except in certain cases.3

 In the current 

environment of steadily rising Medicaid costs straining federal and state 

budgets,4

 states’ use of contingency-fee consultants can be problematic, 

particularly if controls are inadequate to ensure that any additional federal 

reimbursements are allowable Medicaid expenditures. 

The federal government and states each have responsibilities for 

administering Medicaid programs and for ensuring that Medicaid funds are 

spent appropriately on covered services provided to eligible beneficiaries. 

The Centers for Medicare & Medicaid Services (CMS), within the 

Department of Health and Human Services (HHS), administers Medicaid at

the federal level, establishing policies and reviewing and approving state 

Medicaid plans, which describe how each state’s program will operate. 

These written plans are considered to be comprehensive commitments by 

the states to supervise and administer their Medicaid programs. Further, 

when submitting claims for federal reimbursement, each state must certify 

that the claimed expenditures—including claims for payments the state 

made to providers for medical services and claims for the state’s 

administrative expenses—are consistent with federal regulations and the 

state’s approved Medicaid plan. We have earlier reported on the high-risk

nature of the Medicaid program and on various states’ use of financing 

schemes, some involving consultants, to inappropriately increase federal

reimbursements.5

 Some of these reports have raised questions about the 

appropriateness of claims for federal reimbursement developed by 

contingency-fee consultants and whether state and CMS oversight of

claims developed by contingency-fee consultants is sufficient. 

You asked us to provide information about states’ use of contingency-fee 

consultants and whether resulting projects and claims are consistent with

federal law and policy. In this report, we address the following questions: 

 3

Contingency fees are eligible for federal Medicaid reimbursement when a contingency-fee

contract (1) results in cost-avoidance savings or recoveries in which the federal

government would share, (2) is competitively procured, and (3) the savings upon which the 

contingency-fee payment is based are adequately defined and the payments documented to

the Centers for Medicare & Medicaid Services’ satisfaction. 

4

We estimate that the average annual rate of growth for the Medicaid program from 1999

through 2003 was 9.2 percent.

5

A list of related GAO products appears at the end of this report. 

Page 2 GAO-05-748 Medicaid Contingency-Fee Consultants
1. To what extent are states using consultants on a contingency-fee basis

to develop projects to help them maximize federal Medicaid 

reimbursements? 

2. To what extent are the claims from projects developed by contingencyfee consultants to maximize federal Medicaid reimbursements in

selected states consistent with federal law and policy? 

3. To what extent do selected states and CMS oversee the claims from

projects developed by contingency-fee consultants to maximize federal

Medicaid reimbursements? 

To examine the extent to which states are using consultants on a 

contingency-fee basis to develop projects to maximize Medicaid 

reimbursements, we obtained information from the HHS Office of

Inspector General (OIG), CMS, and state officials. We also inventoried 

projects developed by the major contingency-fee consultants employed by

two states, Georgia and Massachusetts. We selected these states in part on

the basis of information provided by CMS, which indicated that the states 

had employed contingency-fee consultants for multiple reimbursementmaximizing projects. To assess the extent to which claims from such 

projects were consistent with Medicaid law and policy, we analyzed 

selected projects in Georgia and Massachusetts in five categories of

Medicaid claims (see table 1). We concentrated on projects in these five 

categories because—on the basis of factors such as nationwide growth in

dollars claimed, the results of our past reviews, and work by HHS OIG to

assess the appropriateness of claims in these categories—we judged them

to be of particularly high risk.6

 Because of the number and complexity of 

contingency-fee projects in Georgia and Massachusetts, we did not review

all such projects in the two states. Instead, we supplemented our present 

review with related work in other states, including our prior reviews and 

assessments by HHS OIG, CMS, and state auditors. Where HHS OIG had 

assessed states’ claims—in particular, Massachusetts’s school-based 

claims—we did not perform a separate assessment. To evaluate state and 

CMS oversight of states’ claims from projects developed by contingencyfee consultants, we reviewed the policies and procedures that selected

states and CMS use to monitor consultant performance. We conducted our 

 6

To review growth in dollars claimed, we reviewed CMS data from states’ Medicaid

expenditure reports. To assess the reliability of these data, we discussed data quality

control procedures and reviewed related documentation with CMS officials. We 

determined that the data were sufficiently reliable for the purposes of this report. 

Page 3 GAO-05-748 Medicaid Contingency-Fee Consultants
work in accordance with generally accepted government auditing 

standards from March 2004 through June 2005. 

Table 1: Five Categories of Medicaid Claims Reviewed by GAO

Category of claims Service 

Targeted case management 

services

Services to help a defined group of beneficiaries gain 

access to needed medical, social, educational, and

other services 

Rehabilitation services Services to reduce a mental or physical disability and 

restore an individual to the best possible functional level

Supplemental payment 

arrangements 

Payments to a class of health care providers, such as

nursing homes, up to a predefined limit 

School-based services Medicaid-covered medical services provided by

schools, such as diagnostic screening or physical 

therapy, or the administrative cost of providing these 

services

Administrative costs Costs the states incur in administering their Medicaid 

programs 

Source: GAO based on CMS information. 

Most states have used contingency-fee consultants to help implement a 

wide range of projects to maximize federal Medicaid reimbursements. 

CMS reports that, according to a survey it conducted in 2004, 34 states had 

used contingency-fee consultants for this purpose, an increase from 10 

states reported to have done so in 2002. Over the past few years, states’

claims in some of the five categories we examined have grown 

substantially in dollar amounts. For example, during fiscal years 1999 

through 2003, combined state and federal spending for one category of

Medicaid services—targeted case management—increased by 76 percent,

from $1.7 billion to $3 billion, across all states. In Georgia and

Massachusetts, consultants have developed a wide range of projects 

across several categories of Medicaid services. Reimbursementmaximizing projects generated an estimated $1.5 billion in additional 

federal reimbursements during fiscal years 2000 through 2004 in Georgia 

and nearly $570 million in Massachusetts. For those additional 

reimbursements, Georgia paid its consultant about $82 million in 

contingency fees, and Massachusetts paid its consultants about $11 million 

in contingency fees. 

Results in Brief

We identified claims from projects developed by contingency-fee 

consultants that appeared to be inconsistent with current CMS policy, 

claims that were inconsistent with federal law, and claims from projects 

Page 4 GAO-05-748 Medicaid Contingency-Fee Consultants
that undermined the fiscal integrity of the Medicaid program. We identified

concerns in each of the five categories of claims we reviewed, including: 

• Targeted case management: Consultants in Georgia and Massachusetts

helped the states maximize federal reimbursements by claiming costs for 

targeted case management (TCM) services that, under state plan 

amendments approved by CMS before 2002, appear to be inconsistent with

CMS’s current policy, which does not allow federal Medicaid

reimbursement for TCM services that are an integral component of other 

state programs providing the services. For example, Georgia and 

Massachusetts claimed and received federal Medicaid reimbursement for 

TCM services for youths in their juvenile justice systems. Starting around 

2002, CMS has disapproved proposed state plan amendments for similar

TCM services in other states, stating that the costs are the responsibility of 

the state. In fiscal year 2004, Massachusetts received an estimated

$68 million in federal reimbursements for TCM services as a result of

contingency-fee projects. Georgia received about $12 million in fiscal year 

2003 for its TCM project.

• Rehabilitation services: Georgia’s consultant helped the state increase 

federal reimbursements for rehabilitation services provided through state 

agencies by $58 million during state fiscal years 2001 through 2003. The 

consultant suggested that two state agencies—which pay private facilities 

for providing room and board, rehabilitation, and other services to

children in state custody—base their claims for Medicaid reimbursement

on the private facilities’ estimated costs, instead of on what the agencies 

actually paid those facilities. The state agencies increased the amount 

claimed for Medicaid reimbursement without increasing the amount paid

to the facilities. In some cases, the amount state agencies claimed for 

rehabilitation services alone exceeded what they paid for all the services 

the facilities provided to children. 

Two factors shared by projects we reviewed signal areas where claims are 

at high risk of being problematic, that is, inconsistent with federal law or 

current policy or the federal-state cost-sharing structure and fiscal

integrity of the Medicaid program. One factor was that the projects 

occurred in categories of Medicaid claims where federal policy had been 

inconsistently applied, was evolving, or was not specific. CMS, for 

example, has not consistently applied its policy when approving state

plans to cover TCM expenditures eligible for federal reimbursement, and it

has not clarified its guidance about appropriate supplemental payment

arrangements, despite its concerns about states’ claims in both these 

areas. A second factor was that Medicaid payments were made in many 

cases to state and local-government agencies as Medicaid providers, a 

Page 5 GAO-05-748 Medicaid Contingency-Fee Consultants
mechanism that can facilitate an inappropriate shift of state costs to the 

federal government. 

The states we reviewed and CMS provided limited oversight to ensure the 

appropriateness of the projects and associated claims developed with

assistance from contingency-fee consultants. Georgia’s and 

Massachusetts’s oversight efforts were limited and insufficient to prevent 

problematic claims associated with contingency-fee projects. CMS relies 

primarily on the states and on its own financial oversight activities to

ensure the appropriateness of consultant projects and claims. Although 

CMS has periodically identified concerns with contingency-fee projects to 

maximize federal reimbursements, the agency has not routinely collected 

information to identify such projects and claims, and it was unaware of

many of the specific projects that we reviewed. Our findings illustrate the 

urgent need to address broader oversight and financial management issues

not limited to situations involving contingency-fee consultants. In Georgia 

and Massachusetts, we found problems with claims the states had 

submitted without consultant assistance. We also found that other states 

have undertaken similar reimbursement-maximizing projects on their own.

CMS has taken some important actions to strengthen its oversight of state 

Medicaid programs, such as its initiative to hire additional financial

analysts to assess each state’s program, but the effectiveness of this 

initiative is not yet known. Moreover, CMS has not yet implemented 

several actions that we have previously recommended on the basis of our 

past work on states’ financing schemes and CMS’s financial management

of Medicaid. 

In addition to reiterating several recommendations to CMS and to 

Congress from our prior work, this report contains recommendations to

the Administrator of CMS to improve the agency’s oversight of states’ use 

of contingency-fee consultants and to strengthen the agency’s overall 

financial management procedures. Doing so would include developing

guidance to clarify CMS policy, ensuring that such guidance is applied 

consistently among states, and collecting and scrutinizing information 

from states about payments made to units of state and local governments. 

In commenting on a draft of this report, CMS stated its belief that it has 

already substantially met our recommendations. While acknowledging that

improper Medicaid payments had unquestionably occurred, CMS provided 

detailed information to support why it believes that it (1) was already

aware of the concerns identified in projects we examined and (2) has 

taken sufficient action to address these concerns and our related 

recommendations. Although we have added additional information on 

Page 6 GAO-05-748 Medicaid Contingency-Fee Consultants
CMS’s initiatives to our report, in our view, CMS has not yet sufficiently

identified or addressed the issues that we found; we believe CMS needs to

do more to identify contingency-fee projects and problematic claims

sooner, before large reimbursements have been made to states. CMS’s 

current efforts to review states’ financing methods—by examining them

when states submit proposed state plan amendments and obtaining 

agreement from states to end methods the agency considers to be 

inappropriate—do not ensure that CMS’s policies are clear or consistently

applied to states. States’ financing methods, for example, may not receive 

scrutiny if the state does not propose state plan amendments. We maintain

our position that CMS needs to be more proactive and do more to clarify, 

communicate, and consistently apply its policies concerning high-risk 

areas. 

We also provided a draft of this report to Georgia and Massachusetts, 

which commented on the importance of contingency-fee contracts and 

states’ needs for consultants for expertise they otherwise would not have. 

Georgia also commented, however, that our report implied that states’ use 

of contingency-fee consultants is somehow illegitimate. We acknowledge

that use of contingency-fee contracts is allowed under law and that states

can employ consultants for a number of valid Medicaid purposes, but we

maintain that our close examination of projects and associated claims

revealed how reimbursement-maximizing projects can be problematic. In 

contrast to CMS’s perspective that the agency had known about and was 

addressing concerns with projects we reviewed in Georgia and 

Massachusetts, both states contend that their claims comply with the law.

Although most may not be illegal, we maintain our position that, because 

some projects and associated claims we examined have been inconsistent 

with Medicaid’s federal-state cost-sharing design or with current CMS 

policy, increased attention is needed to better ensure the fiscal integrity of 

the Medicaid program. 

Title XIX of the Social Security Act7

 authorizes federal funding to states for 

Medicaid. States have considerable flexibility in designing and operating 

their Medicaid programs, but they must comply with federal requirements 

specified in Medicaid statute and regulations. Each state operates its 

program under a plan that CMS must approve for compliance with current

Background 

 7

42 U.S.C. §§ 1396, et seq. (2000). 

Page 7 GAO-05-748 Medicaid Contingency-Fee Consultants
law and regulations. CMS must also approve any amendments to a state’s 

plan. 

Consultants can provide a wide range of services to states, including 

serving state Medicaid programs. States that lack sufficient in-house 

resources can turn to consultants to add staff or needed expertise. 

Contingency-fee consultants are particularly attractive to budgetconstrained states because the states do not need to pay them up front,

agreeing to pay instead a percentage of any additional amounts saved or

collected (the contingency fee). Consultants may also cost states less than 

developing in-house expertise, as states can hire them for short-term or

specific projects rather than commit full-time state personnel. Consultants 

can also be attractive because they do not generally count against agency 

staffing ceilings. Regarding Medicaid, consultants can help states by 

performing services such as: 

• analyzing federal and state statutory and regulatory provisions, 

• developing or revising state Medicaid policies and procedures for 

consistency with federal requirements, 

• assisting states in developing state plan amendments for federal approval, 

• assisting states in determining payment rates for providers, 

• developing cost allocation plans to support claims for administrative

expenditures, 

• training state and local staff in procedures and documentation for 

submitting claims for federal Medicaid reimbursement,

8

• preparing state claims for federal Medicaid reimbursement, and 

• identifying new methods or projects to maximize federal Medicaid

reimbursements. 

The typical Medicaid payment process is illustrated in figure 1. When a 

Medicaid beneficiary receives care from a health care provider such as a 

hospital, physician, or nursing home, the provider bills the state Medicaid

program for its services. The state in turn pays the provider from a 

combination of state funds and federal funds, which have been advanced 

 8

Throughout this report, we use the term reimbursement to refer to federal funds received

by states from CMS for the federal share of states’ claimed Medicaid expenditures. States

generally receive such funds through a reconciliation process whereby an advance from

CMS is reconciled with states’ claimed expenditures. We use the term payment to refer to 

funds used by state Medicaid programs to pay Medicaid providers for providing Medicaid

services.

Page 8 GAO-05-748 Medicaid Contingency-Fee Consultants
by CMS each quarter.9

 The state then files an expenditure report, in which 

it claims the federal share of the Medicaid expenditure as reimbursement

for its payment to providers and reconciles its total expenditures with the 

federal advance. In addition to reimbursement for medical services, the 

state may claim federal reimbursement for functions it performs to 

administer its Medicaid program, such as enrolling new beneficiaries; 

reviewing the appropriateness of providers’ claims; and collecting

payments from third parties, that is, payers other than Medicaid, such as

Medicare, that may be liable for some or all of a particular health claim. 

Figure 1: The Typical Medicaid Payment Process 

State

funds

Source: GAO. 

State Medicaid 

agency

Providers CMS

Transaction 1: A Medicaid beneficiary receives care from 

a health care provider, such as a physician; the provider 

bills the state Medicaid program; and the state pays the 

provider by drawing on a pool of state funds combined 

with a quarterly advance on federal matching funds.

Transaction 2: The state files an expenditure report, in 

which it claims the federal Medicaid matching share as 

reimbursement for its payments to providers and 

reconciles total quarterly expenditures with the federal 

advance. States may file claims for medical services and 

for administrative functions.

Payment

Bill

Expenditure

report

Federal 

funds

$

Advance

States’ claims for federal Medicaid reimbursement—including claims 

prepared by or under arrangements developed by consultants—must

comply with a number of federal statutes and regulations. For example, 

the Social Security Act requires that states provide methods to ensure that

 9

Each quarter, states submit to CMS an estimate of their Medicaid expenditures for the 

upcoming quarter. CMS then authorizes the states to draw on federal funds to pay the 

federal Medicaid share. Massachusetts officials said that the state fully funds Medicaid 

payments and is reimbursed by the federal government.

Page 9 GAO-05-748 Medicaid Contingency-Fee Consultants
Medicaid payments are consistent with efficiency, economy, and quality of

care.10 CMS policy further clarifies and delineates requirements with which 

each state must comply in administering its Medicaid program. CMS 

policy, for example, generally prohibits states from claiming federal 

matching funds on contingency-fee payments, including contingency-fee 

payments among state agencies.11 Each state must also comply with cost 

principles and procedures, such as preparing a cost allocation plan to

justify its administrative claims, as established in Office of Management

and Budget (OMB) Circular A-87.12

CMS has an important role in ensuring that state claims comply with 

Medicaid requirements. Within CMS, the Center for Medicaid and State 

Operations is responsible for approving state Medicaid plans and plan 

amendments, working with the states on program integrity and other 

program administration functions and overseeing state financial

management and internal control processes. The Center for Medicaid and 

State Operations shares Medicaid program administration and financial

management responsibilities with the 10 CMS regional offices. Traditional

financial management analysts in each regional office,13 numbering about

65 nationwide in fiscal year 2005 according to CMS officials, are 

responsible for reviewing states’ Medicaid claims to determine if

expenditures are complete, properly supported by the state’s accounting 

 1042 U.S.C. § 1396a(a)(30) (2000). 

11State Medicaid agencies, for example, may employ other state agencies to perform

administrative activities and pay them on a contingency-fee basis. CMS’s guidance notes

that contingency-fee payments made to another government unit for Medicaid

administrative activities, whether made directly by the Medicaid agency or made by

another unit and reported to CMS through the Medicaid agency, are not allowable for

federal reimbursement. 

12OMB Circular A-87 applies to federal grants to state and local governments. It establishes

principles and standards to provide a uniform approach to determining allowable costs and

promoting effective program delivery, efficiency, and better relationships between federal 

and other governmental units. The circular establishes requirements enabling states to

allocate allowable central services costs to operating agencies, such as the state Medicaid

agency, by developing cost allocation plans. An approved cost allocation plan allows the

state to assign some of the costs of centralized administrative and support services to the 

agencies that use them on a reasonable and consistent basis. State agencies such as

Medicaid may then claim federal reimbursement for those administrative costs as allowed 

by Medicaid statute.

13As discussed later in this report, as part of a new financial management effort, CMS has

an initiative under way to hire approximately 100 new financial analysts with

responsibilities different from those of CMS’s traditional financial management analysts. 

Page 10 GAO-05-748 Medicaid Contingency-Fee Consultants
records, claimed at the appropriate federal matching rates, and allowable

in accordance with Medicaid law and policy. In addition to CMS, external

organizations such as HHS OIG and state auditors routinely conduct

program and financial audits of state Medicaid programs. 

In examining the appropriateness of state Medicaid agency claims for 

health services provided by local school districts, we have reported 

concerns about the role of consultants who were paid on a contingencyfee basis to maximize federal Medicaid reimbursements. In particular, in

June 1999, we testified on the need for federal and state oversight of

growing Medicaid reimbursements to states for Medicaid outreach and 

other administrative activities provided in schools.

14 We found that school

districts had often contracted with consulting firms to perform claims

development and reporting activities and that they paid these firms fees

ranging from 3 to 25 percent of the total amount of the federal Medicaid

reimbursement for the schools’ administrative costs. We found that poor 

guidance and insufficient CMS oversight permitted questionable billing 

practices by states and created an environment of opportunism in which 

inappropriate claims could generate excessive federal Medicaid outlays. 

Our subsequent report in April 2000 on school-based health services 

discussed similar concerns with growing outlays and insufficient CMS 

guidance and oversight to prevent improper reimbursements.

15 Since our 

2000 report, CMS has clarified guidance on submitting claims for schoolbased administrative activities, applying stricter standards and heightening 

review of the methods states use to identify administrative claims for

school-based services.

16 CMS also disallowed more than $278 million in 

inappropriate claims from one state. 

 

:

i

i i i

14GAO, Medicaid: Questionable Practices Boost Federal Payments for School-Based

Services, GAO/T-HEHS-99-148 (Washington, D.C.: June 17, 1999). 

15GAO, Medicaid in Schools Improper Payments Demand Improvements in HCFA 

Overs ght, GAO/HEHS/OSI-00-69 (Washington, D.C.: Apr. 5, 2000). 

16CMS, Medicaid School-Based Adm nistrative Cla m ng Guide (May 2003).

Page 11 GAO-05-748 Medicaid Contingency-Fee Consultants
An increasing number of states are using consultants on a contingency-fee

basis to maximize their federal Medicaid reimbursements through a

variety of projects, according to CMS. Contingency-fee consultants in the

two states we reviewed—Georgia and Massachusetts—have developed 

reimbursement-maximizing projects in each of the five categories of

claims that we reviewed, generating more than $2 billion during state fiscal

years 2000 through 2004 in additional federal Medicaid reimbursements, 

mainly in Georgia. 

CMS surveyed its regional offices in fiscal years 2002 and 2004 and found 

that an increasing number of states were using consultants on a 

contingency-fee basis for projects to maximize federal reimbursements. In

late 2001, CMS discovered that, contrary to CMS policy prohibiting federal 

reimbursement for contingency fees in most instances, at least two states 

(New Jersey and Virginia) had inappropriately claimed federal

reimbursements for such fees. Subsequently, CMS surveyed its regional 

offices to identify which states were using contingency-fee consultants

and for which services. This first survey (spring 2002) showed that 10

states were known by regional staff to be using contingency-fee 

consultants for reimbursement-maximizing projects. In response, CMS 

issued two letters, in May 2002 and in November 2002, reminding regional 

offices and states that although states were allowed to employ 

contingency-fee consultants, the contingency fees themselves were not 

eligible for federal reimbursement except in certain cases.17

Most States Have

Employed

Contingency-Fee

Consultants in a Wide 

Range of 

ReimbursementMaximizing Projects 

CMS Surveys Found 

Increasing Use of 

Contingency-Fee 

Consultants for 

ReimbursementMaximizing Projects 

In June 2004, CMS again surveyed its regional offices to determine how

many states had entered into contingency-fee contracts with private 

consulting firms to maximize federal reimbursements over the period from 

January 1999 through June 2004. This survey identified 34 states involved 

in contingency-fee contracts to help them maximize federal Medicaid 

reimbursements in a variety of categories. Most frequent were claims for 

services provided to Medicaid-eligible children in schools, a category in

 17The May 2002 letter instructed CMS regional administrators to remind states that federal

matching funds were generally not available for contingency-fee contracts and, where CMS 

had inadvertently approved such arrangements, federal matching funds would cease at the 

end of the remaining term. The November 2002 letter provided guidance to regional offices

on criteria that states must meet to receive reimbursement for contingency fees paid to

consultants.

Page 12 GAO-05-748 Medicaid Contingency-Fee Consultants
which contingency-fee consultants have assisted states for years. CMS 

regional offices also reported that 11 states had contracts using 

contingency-fee consultants in multiple areas, some having projects in as 

many as four different categories (see table 2). 

Table 2: CMS’s 2004 Survey Results Showing Categories of Medicaid Claims in 

Which States Had Projects Developed with Contingency-Fee Consultants, January

1999–June 2004 

Claims category 

Number of 

states

School-based health and administrative services 16

Reimbursement maximization (not otherwise specified) 9

Family-planning services 9

Targeted case management services 5

Mental health-related administrative services (in local-government 

and community clinics) 3

Supplemental payment arrangements 2

Child welfare-related services 1

Administrative cost reports 1

Multiple projects 11

Source: CMS.

Our review focused on five categories of claims that we considered at high 

risk of improper payments: TCM services, services for mental or physical

rehabilitation, supplemental payment arrangements, school-based 

services, and administrative costs (see table 3). For most of these 

categories, CMS expenditure data show that federal reimbursement of

states’ claims in recent years has grown nationwide, sometimes 

substantially. Although CMS’s 2004 survey gathered information on states’ 

use of contingency-fee consultants, it would not have captured states’

arrangements established outside the survey period. We identified one 

consultant, for example, who helped two states develop upper payment

limit (UPL) arrangements, although CMS’s 2004 survey did not capture 

these particular states’ contracts. CMS does not identify the extent to 

which states’ Medicaid claims stem from projects using contingency-fee 

consultants to maximize federal reimbursements.

Page 13 GAO-05-748 Medicaid Contingency-Fee Consultants
Table 3: Five Categories of Medicaid Claims Where Contingency-Fee Consultants Are Helping States Maximize Federal 

Medicaid Reimbursements 

Category of Medicaid claims Risk 

Targeted case management services (TCM): Case management 

helps beneficiaries gain access to needed medical, social, educational, 

and other services and coordinates beneficiaries’ use of providers. TCM

enables states to provide case management services to a defined

group or groups of Medicaid-eligible individuals without providing the 

same service to all Medicaid beneficiaries statewide, as normally 

required by Medicaid law. Groups are targeted primarily on the basis of 

shared characteristics, such as location or special health needs. 

Current CMS policy does not allow federal Medicaid

reimbursement for TCM services provided by the state if 

those services are “an integral component” of an existing 

state program.

a

 Medicaid reimbursement, according to CMS, 

is intended to enable provision of new services to 

individuals, rather than to pay for services provided by an

existing state program. CMS data show that during fiscal 

years 1999 through 2003, combined state and federal 

spending for Medicaid TCM services increased by 

76 percent, from $1.7 billion to $3 billion. 

Rehabilitation services: Rehabilitation services are intended for the 

maximum reduction of a physical or mental disability and to restore an 

individual to the best possible functional level. Covered services may 

include occupational and physical therapy, mental health services, and 

treatment for addiction. The benefit is optional, that is, state Medicaid 

programs are not required to cover the service but may do so at their 

own option. 

CMS financial management officials told us that Medicaid

coverage of rehabilitation services is not well defined 

because varied types and levels of service may be 

considered mental or physical rehabilitation. Because 

rehabilitation services are not reported separately in CMS 

expenditure reports, growth in claims specifically for these

services is unknown. According to CMS officials, however,

states’ claims in this area present a high risk of abuse. 

Supplemental payment arrangements: States’ Medicaid rates are 

often lower than the federal Medicare rates to which Medicaid upper 

payment limits (UPLs) rates are tied.

b

 Thus, a gap often exists between 

the amount states actually spend to provide services to Medicaid

beneficiaries and the Medicare-based UPLs. States can obtain 

additional federal funding for the amount under the UPL ceiling by

making supplemental payments to a class of providers, such as nursing 

homes or hospitals. 

As we and others have previously reported,

c

 some

supplemental payment arrangements are inconsistent with

Medicaid’s fiscal integrity and federal-state partnership, in 

particular, those made by states to government-owned or 

government-operated facilities but not retained by those 

facilities. We consider such payments to be illusory. 

Although Congress and CMS have taken action to curb 

excessive UPL arrangements,

d

 states continue to operate 

them. The extent of states’ claims for excessive UPL 

payments is unknown. The federal and state UPL 

expenditures through all UPL arrangements grew from an 

estimated $10.3 billion in 28 states in fiscal year 2000 to

$11.2 billion in 45 states in fiscal year 2004. During this 

period, Congress and CMS acted to limit excessive UPL

arrangements and associated claims. 

School-based services: Schools can help identify Medicaid-eligible 

low-income children, facilitate their enrollment in Medicaid, and provide 

them certain Medicaid-covered services. When Medicaid-eligible 

children receive Medicaid services—such as diagnostic screening or 

physical therapy—through the school system, states can use their 

Medicaid programs to pay for these services. School districts may also 

receive Medicaid reimbursement for the administrative costs of 

providing school-based Medicaid services. 

Responding to concerns about the growth and 

appropriateness of Medicaid claims for school-based

services, CMS began tracking school-based medical and 

administrative services as a separate budget item in fiscal

year 2002; the agency issued guidance on appropriate 

administrative billing in 2003. For fiscal years 2002 through 

2003, total state and federal spending on school-based 

services grew 8 percent nationwide, from $1.97 billion to

$2.13 billion. Nationwide, more than $900 million (state and 

federal) went toward school-based administrative costs in 

both fiscal years 2002 and 2003. 

Page 14 GAO-05-748 Medicaid Contingency-Fee Consultants
Category of Medicaid claims Risk 

Administrative costs: The federal government will reimburse states,

generally at 50 percent, for their costs of administering their Medicaid 

programs. To determine which administrative costs the state can 

attribute to Medicaid, states submit a cost allocation plan for HHS

approval.

e

 This plan establishes the methods the state will use to 

distribute its administrative costs—for example, employee time and 

costs related to providing services to both Medicaid-eligible and nonMedicaid-eligible individuals—across different funding sources. 

CMS found in the early 2000s that some states had 

inappropriately claimed contingency fees as a Medicaid

administrative cost. In addition, a fiscal year 2004 CMS 

survey showed that at least one state was using a 

contingency-fee consultant to increase administrative

claims. CMS data show that for fiscal years 1999 through 

2003, state and federal spending for the states’ Medicaid

administrative costs grew 37 percent from $9.5 billion to 

$13.0 billion.f

Source: GAO. 

a

CMS recently reiterated its TCM policy in a 2004 Administrator’s decision that denied approval of a 

state plan amendment requested by Maryland to provide TCM services to children in the state’s foster

care program. See CMS, Disapproval of Maryland State Plan Amendment No. 02-05, Docket No.

2003-02 (Aug. 27, 2004). The Administrator’s decision was based in part on a statement in the

legislative history accompanying the legislation authorizing coverage for TCM services that payment

for TCM services must not duplicate payments to public agencies or private entities under other 

program authorities. See H.R. Rep. No. 99-453, at 546 (1985). We did not evaluate the basis for 

CMS’s policy as part of this review.

b

UPL is the upper bound on what the federal government will pay as its share of Medicaid costs; it is 

the federal government’s way of placing a ceiling on federal financial participation in a state’s 

Medicaid program. UPLs are tied to the methodology that Medicare, the federal health care program

that covers seniors aged 65 and older and some disabled persons, uses to pay for comparable 

services. 

c

See GAO, Medicaid: Improved Federal Oversight of State Financing Schemes Is Needed, GAO-04-

228 (Washington, D.C.: Feb. 13, 2004) and related products cited therein.

d

For example, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 

directed CMS to issue a final regulation to limit states’ ability to claim excessive federal matching 

funds through UPL supplemental payments.

e

Unlike CMS’s direct review and approval role for states’ Medicaid plan amendments, CMS has an

advisory review role for the plans that state Medicaid agencies prepare for allocating their

administrative overhead costs; at the national level, HHS’s Division of Cost Allocation takes the lead 

in reviewing these cost allocation plans. The division generally distributes copies of cost allocation 

plan sections to affected federal agencies, including CMS, for comment.

f

These figures include costs associated with school-based administration.

Georgia and 

Massachusetts Have 

Extensively Used 

Contingency-Fee 

Consultants 

From state fiscal years 2000 through 2004, Georgia used a private 

consulting firm on a contingency-fee basis for multiple reimbursementmaximizing projects, including projects in the five Medicaid claims 

categories that we reviewed. The consultant provided numerous services

on more than 20 projects, such as creating new methodologies for 

developing claims for federal reimbursement, obtaining legal advice to 

support reimbursement-maximizing claims, and pursuing retroactive

reimbursement for claims that were not previously reimbursed. The 

consultant also helped the state to write state plan amendments and cost 

allocation plans. For example, for five UPL projects, the consultant

developed the formulas for calculating the state’s UPL, drafted the state 

Page 15 GAO-05-748 Medicaid Contingency-Fee Consultants
plan amendment to submit to CMS, and drafted provider agreements to

implement the project. For a project in rehabilitation services, the 

consultant developed a new methodology for developing claims for federal

reimbursement of payments the state made to providers. For TCM projects 

involving two state agencies, the consultant developed revisions to the 

state’s payment rate; drafted the state plan amendment to implement the 

revised rates; drafted revisions to state policy manuals; and conducted 

training sessions with case managers, including identifying services that

could be considered as TCM and explaining how to format their case notes

to support Medicaid claims. 

Georgia paid the consultant mainly from additional federal Medicaid

reimbursements generated from the contingency-fee projects, although 

CMS determined that the state did not claim federal reimbursement for the 

contingency fees themselves. Initially, in 1999, Georgia and the consultant

agreed on a contingency fee based on additional federal reimbursement 

generated by the consultant’s projects. For state fiscal years 2000 through 

2004, the state paid its consultant more than $82 million in contingency 

fees. After UPL projects generated for Georgia more than $1.2 billion in 

additional federal Medicaid reimbursements for state fiscal years 2001 

through 2003, and a dispute developed between the state and the 

consultant about the extent to which the additional reimbursements were 

attributable to the consultant’s project, the state and the consultant agreed 

upon an additional $28 million in fees to be paid over 2 years.18 In total, the 

UPL arrangement and other consultant projects generated an estimated 

$1.5 billion in additional federal Medicaid reimbursements for Georgia 

over approximately 5 years. 

Massachusetts has pursued Medicaid reimbursement-maximizing and costavoidance projects using contingency-fee consultants since the early 

1990s. The state has used various private consulting firms, but since state 

fiscal year 2000, it has relied primarily on a component of the University of 

Massachusetts Medical School (UMMS) to conduct reimbursementmaximizing and cost-avoidance projects, including projects in 

rehabilitation services, supplemental payments, and school-based services.

UMMS has performed a number of services to implement these 

 18The state and the consultant disagreed on the contingency-fee payment for UPL payments

to local-government hospitals and nursing homes. The state and consultant agreed to an 

$81 million compromise fee in 2003. At the time of this agreement, the state had already

paid the consultant about $25 million, and the remaining $56 million was to be paid in

yearly installments of $14 million, with the final installment due in June 2006. 

Page 16 GAO-05-748 Medicaid Contingency-Fee Consultants
reimbursement-maximizing projects, including assisting in drafting state 

plan amendments and preparing Medicaid claims for reimbursement. 

In addition to reimbursement-maximizing projects, Massachusetts’s state 

Medicaid agency also obtains other services from UMMS through 

interagency agreements to help operate its Medicaid program. UMMS 

performs many of the state’s Medicaid administrative functions, such as 

analyzing claims to identify and recover improper payments paid to health 

providers and training state and local staff on procedures for submitting 

claims.19

UMMS was compensated in two ways for its services: (1) for selected 

projects, UMMS was paid a contingency fee that came from the additional 

federal funds received by the state for the particular reimbursementmaximizing or cost-avoidance project;20 and (2) the state paid UMMS from 

the federal reimbursement for its administrative costs. Contingency fees 

paid to UMMS varied by project, generally from 1 to 15 percent of

additional federal reimbursement generated or costs avoided. 

Administrative costs that were attributable to UMMS were paid by the 

state on the basis of UMMS’s reported Medicaid-related costs, according to

UMMS officials. Each quarter, UMMS reported its Medicaid-related costs 

to the state Medicaid agency, which in turn included these costs on the 

state’s quarterly expenditure report to CMS. The state then reimbursed 

UMMS for its reported Medicaid-related administrative costs. We could not

isolate the amount that UMMS received for administrative costs associated 

with federal Medicaid reimbursement-maximizing projects because these 

costs were combined with those for other Medicaid projects, such as 

pharmacy management and utilization review, which UMMS also conducts

for the Medicaid agency. For all its Medicaid administrative activities, 

UMMS in state fiscal year 2004 claimed approximately $60 million 

 19By ownership, UMMS is not a private consultant, although it shares several

characteristics with private consultants. We included UMMS in our review because of these 

shared characteristics, specifically (1) CMS identified and reported UMMS as a 

contingency-fee consultant; (2) the consulting work UMMS does for Massachusetts is done

under “interdepartmental service agreements,” which state officials describe as contracts;

(3) UMMS is paid a contingency fee by the state for many of its state projects; and 

(4) UMMS officials said the medical school serves as a contingency-fee consultant for other

states and as a subcontractor for other consultants.

20For example, UMMS was paid a contingency fee of $115,000 in state fiscal year 2004 for

increasing state claims for family-planning services provided by managed care 

organizations. 

Page 17 GAO-05-748 Medicaid Contingency-Fee Consultants
(excluding contingency fees) in state and federal Medicaid 

reimbursements. 

Massachusetts has used other contingency-fee consultants for 

reimbursement-maximizing and cost-avoidance projects, including a 

private consultant that developed a TCM project and rate-setting proposal

for the state’s Department of Youth Services, among others. That private 

consultant still served in state fiscal year 2004 as a consultant paid on a

contingency-fee basis, helping state agencies with various reimbursementmaximizing projects. For state fiscal year 2004, Massachusetts paid the

private consultant about $4 million in fees from contingency-fee 

agreements for generating nearly $106 million in savings and additional 

federal reimbursements.

According to the Massachusetts Medicaid agency, the state paid more than 

$57.5 million to contingency-fee consultants during state fiscal years 2000 

through 2004 for projects that generated almost $1.3 billion in funds for the 

state through all types of reimbursement-maximizing and cost-avoidance

projects. Some of these projects would have accrued savings to Medicaid 

in which the federal government would have shared, such as program 

integrity efforts to ensure appropriate payments to individual providers. 

Most of the contingency fees (about $37 million) were paid to UMMS; other

(private) consultants were paid about $20.5 million. From state fiscal years

2000 through 2004, reimbursement-maximizing projects generated about 

$570 million in additional federal reimbursements for the state, for which 

Massachusetts paid consultants nearly $11 million in contingency fees. 

UMMS projects accounted for $540 million of the total, for which it was 

paid $9 million in contingency fees. 

We and others have identified claims from contingency-fee consultant 

projects that appeared to be inconsistent with current CMS policy and 

claims that were inconsistent with federal law. We also identified claims

from projects that undermined Medicaid’s fiscal integrity. Such projects

and resulting problematic claims arose in each of the five categories of 

claims that we reviewed, either in Georgia or Massachusetts or both. 

During our work we observed two factors that appeared to increase the 

risk of problematic claims. One factor involved federal requirements that

were inconsistently applied, evolving, or not specific; the second involved

Medicaid payments to government units, which can facilitate the

inappropriate shifting of state costs to the federal government. 

Claims from 

Contingency-Fee

Projects Are Not 

Always Consistent 

with Law or Current 

Policy and Can 

Undermine Medicaid’s 

Fiscal Integrity 

Page 18 GAO-05-748 Medicaid Contingency-Fee Consultants
In the five categories of Medicaid services we reviewed, we identified 

claims that were problematic in Georgia, Massachusetts, or both. We 

identified claims for TCM services that appear to be inconsistent with 

current CMS policy and claims for rehabilitation services that were

inconsistent with federal law. In other areas, such as supplemental

payments, we found claims associated with projects that undermined the 

fiscal integrity of the Medicaid program and the federal-state partnership. 

In addition to our work in Massachusetts and Georgia, we identified 

several reports by HHS OIG about other states, which raise issues about 

the appropriateness of claims stemming from contingency-fee contracts 

for school-based services and for administrative costs. 

Most of the claims for federal reimbursement of Medicaid TCM services in

Georgia and Massachusetts that we reviewed appeared to be inconsistent

with current CMS policy, which does not allow federal reimbursement for 

TCM services that are integral to other state programs.21 Under previously

CMS-approved state plans, consultants helped Georgia and Massachusetts 

increase federal TCM reimbursements.22 In Georgia, the consultant

assisted the state in increasing federal reimbursement for TCM services 

provided by two state agencies: the Department of Juvenile Justice and the

Division of Family and Children’s Services. The consultant assisted 

Georgia by streamlining the billing process, drafting a state plan 

amendment proposal,

23 and increasing the number of Medicaid

beneficiaries for whom these two non-Medicaid state agencies billed case 

management services, thus reducing costs to the state for operating these 

agencies. In Massachusetts, contingency-fee consultants helped the state 

increase federal reimbursement for TCM services provided by three state

agencies: the Departments of Social Services, Youth Services, and Mental 

Health. The consultants helped develop state plan amendments that

established Medicaid coverage for the agencies’ case management services 

Contingency-Fee Projects 

in Selected States Resulted 

in Problematic Federal 

Reimbursements in Five 

Categories of Claims

Targeted Case Management 

Services 

 i i 21See State Med caid Manual §4302 and CMS, D sapproval of Maryland State Plan 

Amendment No. 02-05, Docket No. 2003-02 (Aug. 27, 2004).

22CMS approved the states’ TCM amendments before 2002. 

23The state plan amendment revised the state’s existing TCM provision (approved by CMS 

in March 2002) to change the payment rate. 

Page 19 GAO-05-748 Medicaid Contingency-Fee Consultants
and assisted with developing and updating the rates Medicaid would pay 

providers for TCM services.24

In analyzing the TCM projects and the basis for TCM claims, we found that

Georgia and Massachusetts were claiming federal reimbursement, under 

their CMS-approved state plan amendments, for TCM services that

appeared to be unallowable under CMS’s current TCM policy. Specifically, 

the claims were for services that appeared to be integral components of

non-Medicaid programs in these states. The states’ laws, regulations, or 

policies called for case management services in these programs, and the 

case management services were provided to all Medicaid- and nonMedicaid-eligible individuals served by the programs.25 For example, all 

children served by Massachusetts’s and Georgia’s child welfare agencies

receive a broad range of services to promote their welfare and protect 

them from abuse and neglect. To fulfill this responsibility, state employees 

provide case management services, refer the children to others for

services, and monitor their well-being and progress. CMS has denied TCM

claims for similar programs in other states. In fiscal year 2002, for 

example, CMS denied a state plan amendment proposal to cover TCM 

services in Illinois, and in fiscal year 2004 it found TCM claims in Texas 

unallowable, in part because the TCM services claimed for reimbursement

were considered integral to other state programs. As in Georgia and 

Massachusetts, the TCM services in Illinois were for children served by the 

state’s juvenile justice system. In Texas, such children were served by the 

state’s child welfare and foster care system. 

In Georgia in fiscal year 2003, the state received an estimated $17 million 

in federal reimbursements for TCM claims from the Department of 

Juvenile Justice and the Division of Family and Children’s Services, of

which about $12 million was for services that appeared to be integral to

non-Medicaid programs. In Massachusetts in fiscal year 2004, the state 

 24Contingency-fee payments for TCM claims ended in 2003. According to Massachusetts

officials, the consultants continued to assist the agencies in processing their TCM claims

after 2003 but no longer received a contingency fee. 

25CMS’s statements regarding TCM services do not define the phrase “integral component”

but, rather, indicate that the agency considers whether the services are related to other

programs. In the absence of a CMS definition, we considered (1) whether case management

was called for by state law, regulation, or policy; (2) whether case management was

provided to all Medicaid- and non-Medicaid-eligible clients served by the program

statewide; and (3) whether the services were similar to those that were provided by states

whose TCM state plan amendments or claims had been denied by CMS. 

Page 20 GAO-05-748 Medicaid Contingency-Fee Consultants
received an estimated $68 million in federal reimbursements generated by

claims from the Departments of Social Services, Youth Services, and 

Mental Health—the agencies whose TCM projects were developed by 

consultants—for services that appeared to be integral to non-Medicaid 

programs.

26 CMS officials agreed with our assessment that the claims for 

TCM services in these two states were problematic, and CMS officials 

noted that they had been aware of the potential problems in 

Massachusetts for some time before our review. CMS officials stated that, 

under an interagency agreement with HHS OIG, HHS OIG had initiated an 

audit of Massachusetts’s TCM claims in December 2003. At the time of our 

review, HHS OIG’s findings had not been released.

Our review of projects involving rehabilitation services found claims that

were inconsistent with federal law from a project in Georgia and 

potentially duplicated claims for rehabilitation services in Massachusetts. 

Georgia’s contingency-fee consultant helped the state develop a project to 

increase the rates paid by Georgia’s Medicaid program to two state 

agencies for rehabilitation services, which in effect allowed the state to 

overpay these agencies for one set of services while reducing the agencies’

costs for other, non-Medicaid services. In Massachusetts, a consultant

helped two state agencies increase claims for rehabilitation services, 

potentially duplicating other federal Medicaid reimbursements obtained by

the state. 

Rehabilitation Services

In Georgia, the Department of Juvenile Justice and the Division of Family 

and Children’s Services place certain children in state custody in private 

residential care facilities throughout the state. Under contract with these

state agencies, the residential facilities provide various services, including 

many not covered by Medicaid, such as room and board, general

supervision, and educational services. The facilities also provide 

rehabilitative counseling and therapy services. The facilities receive a per 

diem payment from the state agencies for providing all of these services. 

The Department of Juvenile Justice and Division of Family and Children’s 

Services then bill the state Medicaid agency for mental health 

 26In examining CMS expenditure reports, we found that both Georgia and Massachusetts

had categorized non-TCM services, such as rehabilitation services, as TCM. We obtained

estimates from the states of the amount the states had claimed for TCM services. 

Page 21 GAO-05-748 Medicaid Contingency-Fee Consultants
rehabilitation services, one component of the services the agencies pay the 

private facilities to provide.27

As recommended by its contingency-fee consultant, Georgia increased the 

rates at which the state’s Medicaid agency paid the Department of Juvenile 

Justice and the Division of Family and Children’s Services for these 

rehabilitation services. The per diem amount these agencies paid the

private facilities, however, stayed the same. Specifically, the consultant 

recommended that the two state agencies claim Medicaid reimbursement

on the basis of the facilities’ estimated costs for rehabilitation services, 

rather than on the state agencies’ actual per diem payment. Before the 

project, the state agencies sought Medicaid reimbursement for that portion

of the per diem payment attributable to the facilities’ estimated cost for 

providing rehabilitation services. As a result of the change, the state was

able to shift costs it had previously covered to Medicaid. For example, for 

one category of children, the percentage of the state’s per diem paid by 

Medicaid increased from 50 percent under the state’s prior method to 87 

percent under the new method, while the share of the per diem paid by 

state funds decreased from 29 percent to less than 1 percent. In some

cases, the added reimbursement from the Medicaid agency covered the 

other state agencies’ own shares of the per diem payments to the 

facilities—shares that covered the costs of services other than 

rehabilitation. For example, the portion billed to Medicaid of one agency’s 

per diem payment to one facility increased from $115 to $162 while that

agency’s own share decreased from $37 to $0. In all, this project increased 

the federal Medicaid reimbursement to the state agencies by $58 million 

during state fiscal years 2001 through 2003.28

The change in the basis for the expenditures that were claimed for 

Medicaid reimbursement resulted in payments from Georgia’s Medicaid

agency to the Department of Juvenile Justice and the Division of Family 

 27Specifically, the state Medicaid agency was billed for “therapeutic residential intervention

services,” which are defined by the state as comprehensive rehabilitation services

consistent with the diagnosis and treatment needs of the child’s condition. Therapeutic 

residential intervention provides mental health treatment services for emotionally

disturbed and severely emotionally disturbed children. According to state officials, these 

rehabilitation services were covered under the state plan provision authorizing early and 

periodic screening, diagnostic, and treatment services, which are comprehensive screening

and treatment services that states provide to children and adolescents younger than 21. 

28In addition to the new method for billing Medicaid, the contingency-fee project also

helped Georgia expand the number of Medicaid beneficiaries and private facilities for 

which rehabilitation services were billed. 

Page 22 GAO-05-748 Medicaid Contingency-Fee Consultants
and Children’s Services for services provided by private facilities that in

some cases were higher than what the agencies paid the facilities for all 

contracted services combined (Medicaid- and non-Medicaid-covered). 

Specifically, for 82 facilities (about 43 percent of the residential facilities), 

the amount the state Medicaid agency reimbursed the Department of

Juvenile Justice and the Division of Family and Children’s Services in state

fiscal year 2004 exceeded the total amount these agencies actually paid the 

facilities for all services, not just rehabilitation services. One facility, for 

example, was paid by the Division of Family and Children’s Services 

$37 per day per eligible child for all services covered by the per diem 

payment, but the state agency billed the Medicaid program $62 per day for 

rehabilitation services alone. 

CMS officials agreed with our conclusion that the claims from this

contingency-fee project were inconsistent with federal law. Specifically, 

the arrangement was not in accord with the statutory requirement that

payments be consistent with efficiency, economy, and quality of care. 

Further, federal Medicaid funds are intended for Medicaid-covered 

services for eligible individuals on whose behalf payments are made, not

to subsidize non-Medicaid-covered services.

29 In discussing Georgia’s 

reimbursement-maximizing project, CMS officials also identified a number

of additional concerns, including whether the billing agencies, as well as 

the facilities they paid, were qualified Medicaid providers; whether the 

facilities’ estimates of Medicaid costs were appropriate; and whether all 

services included in the facilities’ estimates were Medicaid-covered 

services. After we brought it to the agency’s attention, CMS initiated a 

review of this contingency-fee project and the allowability of associated 

claims for federal Medicaid reimbursement.

In Massachusetts, a contingency-fee consultant helped two state agencies 

increase claims for rehabilitation services that potentially duplicated 

federal payments the state had already received because, according to 

CMS officials, the services were to be paid for under the state’s managed 

care agreement. The consultant developed and implemented a project in

which the state’s Department of Youth Services (the state’s juvenile justice

agency), for example, started billing Medicaid for rehabilitation services 

that the state agency was responsible for providing directly to youth it 

served. As with Georgia’s arrangement, the Department of Youth Services

billed Medicaid for payments the agency made to private facilities that

 29See 42 U.S.C. §§ 1396 and 1396a(a)(30) (2000). 

Page 23 GAO-05-748 Medicaid Contingency-Fee Consultants
cared for youths in the state’s juvenile justice system. To the extent that 

the youth served by the department were enrolled in the state’s Medicaid 

managed care program, these payments may have duplicated payments the

state had already received for rehabilitation services provided under that

program. States typically accept a fixed federal payment per person per 

month for providing a range of services to Medicaid beneficiaries enrolled 

in managed care programs. Rehabilitation services are covered by the 

managed care payment Massachusetts receives. CMS officials agreed that

it was likely that duplicate payments occurred, because a significant

portion of the state’s Medicaid beneficiaries are enrolled in its managed 

care program. CMS officials could not, however, estimate the amount of

duplicate payments. 

Consultants in both Georgia and Massachusetts helped the states

implement supplemental payment arrangements that claimed federal

reimbursements on behalf of state and local-government facilities, which 

did not retain the bulk of the Medicaid payments. Although, under current

law and CMS policy, states are allowed to claim federal reimbursements 

for supplemental payments they make to providers up to UPL ceilings, we

have earlier reported that payments in excess of a provider’s costs that are 

not retained by the provider as payment for services actually provided are 

inconsistent with Medicaid’s federal-state partnership and fiscal integrity.30

These payments can be illusory: that is, the state can benefit from the

arrangements by appearing to pay the providers more than they ultimately 

retain while the state seeks federal reimbursement on the excess payment. 

Most of the additional federal Medicaid funding generated by Georgia’s 

reimbursement-maximizing projects—$1.2 billion during state fiscal years 

2001 through 2003—came through UPL financing arrangements developed 

by the state’s consultant. The consultant developed five arrangements—

one each for local-government-operated inpatient hospitals, outpatient 

hospitals, and nursing homes and state-owned hospitals and nursing 

homes. During state fiscal years 2001 through 2003, the state made

supplemental payments totaling $2.0 billion to nursing homes and 

hospitals operated by local governments (see fig. 2). A sizable share of the 

$2.0 billion, however, was illusory. In reality, the health facilities netted 

$357 million because they had transferred $1.7 billion to the state Medicaid 

Supplemental Payments 

 f

i

30See, for example, GAO, Medicaid: Intergovernmental Trans ers Have Facilitated State

Financ ng Schemes, GAO-04-574T (Washington, D.C.: Mar. 18, 2004), and GAO-04-228. 

Page 24 GAO-05-748 Medicaid Contingency-Fee Consultants
agency through a process known as an intergovernmental transfer.31 The 

state combined this $1.7 billion with $1.2 billion in federal funds that had 

been advanced to the state through the quarterly advance process. The

advanced amount represented the estimated federal share of the planned 

supplemental payments to local-government facilities of $2.0 billion. The 

state thus had a funding pool of $2.9 billion at its disposal. From this pool, 

the state made the $2.0 billion in supplemental payments to localgovernment providers and retained $844 million to offset its Medicaid 

expenditures. 

Figure 2: Georgia’s UPL Arrangement with Local-Government Health Care Providers, State Fiscal Years 2001–2003 

State Medicaid 

agency

$2.9 billion

CMS

✖

Local-government 

facilities

Local-government 

facilities net $357 million

Source: GAO.

Transaction 3: State pays $2.0 billion to localgovernment facilities

$1.7 billion

$2.0 billion

$1.2 billion

Transaction 1: Local-government facilities 

transfer $1.7 billion to the state Medicaid agency

Transaction 2: State draws, from its federal advance, the federal 

share of its planned $2.0 billion payment to local-government 

facilities, resulting in a funding pool of $2.9 billion

State retains $844 million CMS pays $1.2 billion

Note: Totals may not add up because of rounding.

 31Intergovernmental transfers are a tool that state and local governments use to carry out

their shared governmental functions, such as collecting and redistributing revenues to

provide essential government services. 

Page 25 GAO-05-748 Medicaid Contingency-Fee Consultants
Despite actions taken by Congress and CMS to narrow loopholes

associated with UPL financing schemes, federal reimbursements for 

provider payments made up to the UPL are still allowed under federal law

and CMS policy. Georgia’s arrangement illustrates how current law and 

UPL policy continue to allow states to inappropriately generate excessive 

federal matching payments beyond standard Medicaid payments for 

services. 

Georgia’s consultant also developed a UPL arrangement with state-owned 

hospitals. During state fiscal years 2001 through 2003, the state made 

$108 million in UPL payments to state hospitals, which included 

$64 million in federal funds. The bulk of the payment, however, was 

illusory, in that the hospitals’ net increase in payments was $22 million. 

Through this arrangement, the state Medicaid agency was able to retain 

$42 million in additional funds, which it used to offset its Medicaid 

expenditures. In commenting on a draft of this report, the state said that it

had agreed with CMS to end the aspects of its UPL arrangement that 

resulted in federal reimbursements exceeding the state’s actual payment 

to the providers, effective June 30, 2005. 

Massachusetts’s consultant similarly assisted the state with increasing

federal reimbursements through a UPL arrangement. Under a May 2003 

agreement between UMMS and the Massachusetts Medicaid agency, 

UMMS developed a UPL project involving government-owned or 

government-operated nursing facilities, which entailed illusory payments

to providers.

32 As in Georgia, Massachusetts’s payments, which involved 

intergovernmental transfers, were illusory because the state claimed 

federal matching for a UPL payment of $8.6 million when the net payment 

increase to the nursing homes was $1.2 million. According to the state

comptroller’s office, the Medicaid agency had in August 2003 paid UMMS 

about $155,000 for the project, a contingency fee of 5 percent of the 

$3.1 million in additional federal Medicaid reimbursements that the project

had generated for the state. As with Georgia, the state Medicaid agency

agreed in August 2004 to end certain aspects of its UPL arrangement 

effective June 30, 2005. 

 32The project description indicated that UMMS agreed to help the state “put the 

mechanisms in place required to carry out the related intergovernmental transfer of funds

back to the state.”

Page 26 GAO-05-748 Medicaid Contingency-Fee Consultants
Massachusetts contracted with UMMS to implement two other types of

supplemental payment arrangements (involving disproportionate share 

hospital payments), which we were unable to fully evaluate for their

consistency with federal law and policy. The arrangements are complex, 

requiring substantial documentation to assess. The information we

received from the state raised legal and policy questions, but the state 

Medicaid agency did not produce the extensive documentation we needed 

within the time frame of our work. We believe that a separate study of 

these arrangements would be required to assess their appropriateness. 

Where appropriate, we have referred information to CMS and HHS OIG 

about projects within the scope of our work that we were unable to

evaluate (see app. I). 

HHS OIG has identified concerns with states’ school-based claims for 

Medicaid services in Massachusetts and in several other states that have 

relied on the work of contingency-fee consultants. (See app. II for a 

summary of selected HHS OIG reports of states that have used 

contingency-fee consultants.) In Massachusetts, HHS OIG reported on 

concerns with the adequacy of state and UMMS monitoring of claims for 

school-based services to ensure school districts’ compliance with federal

and state requirements, estimating that $2.9 million in unallowable

Medicaid claims were paid in state fiscal year 2000.

33 HHS OIG found that

the state had inappropriately submitted claims for services that were not 

documented as delivered, provided by unqualified providers, or provided 

to students who were absent on the dates of the claimed services. 

According to state officials, after further review, CMS, which reviews HHS

OIG recommendations and issues final disallowances, imposed a 

$1.2 million disallowance. In a separate report on Massachusetts’ claims 

for administrative costs related to school-based services, HHS OIG found 

that in state fiscal years 2000 and 2001, the state did not monitor the 

appropriateness of school districts’ claims that were compiled by UMMS,

34

resulting in at least $5 million in unallowable claims.35

School-Based Health Services 

and Associated Administrative 

Costs 

 i i

t

33HHS OIG, Medica d Payments for School-Based Health Services—Massachusetts Divis on

of Medical Assistance, A-01-02-00009 (Washington, D.C.: July 14, 2003). 

34State officials, in comments on a draft of this report, noted that the state had disagreed

with OIG’s finding and noted that no disallowance had been issued by CMS as of June 2005.

35HHS OIG, Medicaid School-Based Health Services Adminis rative Costs—Massachusetts, 

A-01-02-00016 (Washington, D.C.: Sept. 15, 2004).

Page 27 GAO-05-748 Medicaid Contingency-Fee Consultants
In commenting on a draft of this report, Massachusetts officials cited a 

number of actions taken in response to HHS OIG’s reports. To strengthen 

oversight of school-based claims, state efforts include enhanced training 

and technical assistance to school districts, expanded management

reporting, new monitoring and auditing systems, and a newly established 

Director of School-Based Medicaid within the Office of Medicaid. 

In the context of documenting Georgia’s contingency-fee project related to

school-based claims, we identified a concern with how Georgia was using 

additional federal reimbursements gained from school-based claims. 

Georgia’s contingency-fee consultant assisted the state with Medicaid 

claims for school-based services in a project that generated about 

$54 million in federal Medicaid reimbursements over the 3 years the 

consultant was paid and that, on the basis of state data, we estimate

continues to generate about $25 million annually.36 We found that the 

school districts were not receiving all of the federal Medicaid matching 

funds that were generated on their behalf—a concern we noted in prior 

reports on state school-based claims.37 According to a state official and 

documents provided by the state, the state retained $3.9 million, or 

16 percent, of federal reimbursements that were claimed on behalf of the 

school districts for state fiscal year 2003, most of which was used to pay 

its contingency-fee consultant and about $1 million of which was used to

cover the salaries and administrative costs of the five state employees who 

administered school-based claims in Georgia. 

Our work in Massachusetts and Georgia found that neither state had 

claimed federal reimbursement for contingency fees they had paid their 

consultants. In examining Massachusetts’s administrative claims, however, 

we found that, despite a major reorganization of state agencies beginning 

in mid-2003, the state did not submit a complete cost allocation plan—

which would have provided the basis for its administrative claims—

Administrative Costs

 36We did not assess whether the school-based health services that the state claimed were

allowable.

37In particular, our earlier reports found that in some states, school districts received only a 

small portion of the federal funds that were claimed on their behalf because states and 

contingency-fee consultants shared in the reimbursements. Rather than fully reimbursing 

schools for their Medicaid-related costs, some states retained as much as 85 percent of 

federal Medicaid reimbursements. According to several state officials, because states

funded a portion of local education activities, Medicaid services provided by schools were

partially funded by the state. Under this reasoning, some states believed they should 

receive a share of the federal reimbursements claimed by school districts. See 

GAO/T-HEHS-99-148 and GAO/HEHS/OSI-00-69. 

Page 28 GAO-05-748 Medicaid Contingency-Fee Consultants
reflecting its new organization until December 2004. As of April 2005, the 

revised cost allocation plan had not been approved by HHS.38 We also 

found that the state may have claimed more in administrative costs related

to its contingency-fee projects than may have been warranted. For 

example, according to the state’s claims for administrative reimbursement 

for UMMS’s costs, 100 percent of one senior official’s salary was claimed 

as a Massachusetts Medicaid administrative expense, even though the 

official had worked on UMMS projects conducted for other states. We also 

identified an issue related to Georgia’s claims for administrative costs that 

we were unable to fully evaluate during our work. As discussed in

appendix I, we have referred information regarding Georgia’s 

administrative claims to CMS for further review. 

HHS OIG has recently reported on unallowable administrative expenses in 

states other than Massachusetts related to their use of contingency-fee 

consultants. In October 2004, for example, HHS OIG reported that

Colorado had received about $180,000 in improper federal Medicaid 

reimbursement because the state had claimed about $359,000 in consultant

fees that were contingent upon reimbursements from the federal

government for Medicaid family-planning claims.39 The claims were made 

from April 2002 through December 2003. Similarly, in November 2004, 

HHS OIG reported that Virginia had improperly claimed as Medicaid 

administrative expenditures the contingency fees paid to a consultant for 

federal reimbursement-maximizing services also related to family-planning

services. From October 2001 through April 2003, the state had claimed

about $678,000 in unallowable contingency-fee payments made to a 

consultant, the federal share of which was about $339,000.40 Both states

agreed that they had improperly claimed these fees and submitted 

 

i i l

38The Massachusetts Comptroller’s office proposed an interim revision to the cost

allocation plan in a letter dated March 10, 2004, but reviewers in CMS region I noted that

the letter spoke only of the consolidation of human resource functions and not of broader

reorganization issues. In an April 2004 memo to the HHS Division of Cost Allocation, CMS 

regional reviewers commented that the interim revision contained inconsistencies and 

mathematical errors and recommended that the state revise and resubmit its proposal. 

Another draft submitted in September 2004 was incomplete and could not be reviewed. In

December 2004, the state submitted a revision of the September draft, which was under

review as of April 2005. 

39HHS OIG, Contingency Fees Claimed by Colorado as Medicaid Reimbursement, A-07-04-

01009 (Washington, D.C.: Oct. 29, 2004). 

40HHS OIG, Review of Virg nia’s Contingency Fee Payments for Maximiz ng Federa

Revenues Claimed by Its Medicaid Managed Care Program, A-03-04-00213 (Washington,

D.C.: Nov. 9, 2004).

Page 29 GAO-05-748 Medicaid Contingency-Fee Consultants
corrective adjustments. According to a CMS official, the agency recouped 

the states’ excessive reimbursements.

In early 2005, CMS acted upon its concerns about states’ Medicaid

administrative claims. For example, CMS reported that, in some instances,

evidence showed that states had attempted to shift administrative costs 

associated with other social service programs to Medicaid. The President’s 

budget proposal for fiscal year 2006 contains an initiative to limit states’

allotments for Medicaid administrative claims.

41

Two Factors Increase Risk 

of Problematic Claims 

We observed two factors in many reviewed projects that appeared to 

increase the risk that claims are problematic, that is, inconsistent with 

federal law or policy, or with Medicaid’s federal-state partnership and 

fiscal integrity. One factor was that they came under areas of Medicaid 

claims where federal requirements were inconsistently applied, evolving, 

or not specific, at times resulting in inconsistent treatment of states by 

CMS. Despite CMS’s long-standing concern about state financing 

arrangements for both TCM and supplemental payments, the agency has 

not issued adequate guidance to clarify expenditures allowable for federal 

reimbursement. Federal policy for claims in these categories has evolved

over time, and the criteria that CMS applies to determine whether claims 

are allowable have been communicated to states mainly through statespecific state plan amendment reviews or claims disallowances, rather 

than through guidance or regulation. State officials, HHS OIG auditors, and

CMS financial management staff have raised concerns about the lack of, 

and need for, improved guidance in a number of categories that we

reviewed. Some officials said that the lack of clear CMS guidance has 

allowed states to develop new financial arrangements, or to continue

existing ones, that take advantage of gray areas. In line with these 

concerns, we also found that existing guidance on allowable claims had 

been inconsistently applied, had evolved over time, or, in the case of

rehabilitation services, had not been specified. 

 41The CMS Administrator’s performance budget for fiscal year 2006 proposes to establish 

individual state allotments for Medicaid administrative claims. CMS’s budget request notes

that the open-ended financing of Medicaid administrative claims does not encourage states

to administer the program as efficiently as possible. CMS estimates 5-year budget savings

of $1.1 billion from its proposal. See the Centers for Medicare & Medicaid Services’ 

performance budget for fiscal year 2006. 

Page 30 GAO-05-748 Medicaid Contingency-Fee Consultants
• Inconsistently applied policy for allowable TCM services: Although 

CMS began to deny proposed state plan amendments that sought approval

for Medicaid coverage of TCM services that were the responsibility of

other state agencies in 2002, states with such arrangements then in place, 

such as Georgia and Massachusetts, were allowed to continue them. For 

other states, CMS had determined that such arrangements were not

eligible for federal Medicaid reimbursement for several reasons: (1) the 

services were typically integral to existing state programs, (2) the services

were provided to beneficiaries at no charge, and (3) beneficiaries’ choice 

of providers was improperly limited.42 CMS, however, had approved 

Georgia’s and Massachusetts’s state plan amendments for TCM services

before 2002. Although CMS has since applied these criteria to deny TCM

arrangements or claims—for example, in Maryland, Illinois, and Texas—it

has not yet sought to address similar, previously approved TCM

arrangements that are inconsistent with these criteria. CMS regional 

officials told us they could not reconsider the TCM claims from two 

agencies in Georgia and four in Massachusetts because they were waiting 

for new guidance that the agency was preparing.43 CMS has been working

on new TCM guidance for more than 2 years, according to agency officials, 

and as of May 2005 this guidance had not been issued. CMS’s fiscal year 

2006 budget submission identifies savings that could be achieved by

clarifying allowable TCM services, but CMS had not published a specific

proposal at the time we completed our work.44

• Evolving policy for allowable supplemental payment arrangements: 

For several years, we and others have reported on state financing 

arrangements that allow states to inappropriately generate federal 

Medicaid reimbursement without a corresponding state expenditure. 

While Congress and CMS have taken steps to curb these abuses, states can 

still develop arrangements enabling them to make illusory payments to 

gain federal reimbursements for their own purposes. CMS has recognized 

that states can gain from supplemental, such as UPL, payment

 

i -

42A CMS Administrator’s decision denying a proposed state plan amendment from Maryland

to cover TCM services articulated criteria that CMS has applied to evaluate state TCM plan 

amendments. See CMS, D sapproval of Maryland State Plan Amendment No. 02 05, Docket

No. 2003-02 (Aug. 27, 2004).

43A CMS official stated that the agency’s most recent guidance on TCM, issued in January 

2001, contained problems and errors that caused confusion regarding appropriate TCM

claims when non-Medicaid state agencies were involved. 

44The CMS Administrator’s performance budget for fiscal year 2006 proposes to clarify 

allowable TCM services and align federal reimbursement for TCM services with an

administrative matching rate of 50 percent. CMS estimates 5-year budget savings of $1

billion from reducing the reimbursement for TCM to the administrative matching rate. 

Page 31 GAO-05-748 Medicaid Contingency-Fee Consultants
arrangements through intergovernmental transfers. Since fiscal year 2003, 

for example, CMS has worked with individual states to address such 

arrangements and, under this effort, CMS had identified and made

agreements with Georgia and Massachusetts to change how their UPL 

arrangements operated.

45 At the same time, the agency has not issued 

guidance stating its policy on acceptable approaches for supplemental 

payment arrangements, including the allowed methods for funding the 

state’s share of the Medicaid program. CMS’s budget for fiscal year 2006

proposes to achieve federal Medicaid savings by curbing financing 

arrangements that have been used by a number of states to inappropriately 

obtain federal reimbursements. The specific proposal, however, had not

been published at the time we completed our review.

46

• Unspecified policy on allowable Medicaid rehabilitation payments

to other state agencies: CMS has not issued policy guidance that

addresses situations where Medicaid payments are made by a state’s 

Medicaid agency to other state agencies for rehabilitation services. CMS 

financial management officials told us that states’ claims for rehabilitation 

services posed an increasing concern, in part because officials believed 

that states were inappropriately filing claims for services that were the 

responsibility of other state programs. CMS does not specify whether 

claims for the cost of rehabilitation services that are the responsibility of

non-Medicaid state agencies are allowable. CMS’s fiscal year 2006 budget 

submission identifies savings that could be achieved by clarifying

 45In commenting on a draft of this report, CMS said that 23 states had agreed to terminate 

one or more financing practices that increased the federal share of the cost of providing 

Medicaid services, effective with the end of their state fiscal year 2005. CMS had identified

an additional 10 states with similar financing mechanisms that are in the process of

terminating such arrangements. Assessing the provisions of CMS agreements with

individual states is part of an ongoing GAO review. 

46The budget proposes to build on CMS’s efforts to curb questionable financing practices by

(1) recovering federal funds claimed for covered services but retained by the state and 

(2) capping payments to government providers at no more than the cost of furnishing

services to Medicaid beneficiaries. CMS estimates 5-year budget savings of $5.9 billion from

this proposal. GAO has recommended since 1994 that Congress consider legislation to 

prohibit Medicaid payments to government providers that exceed the providers’ actual

costs. See GAO, Medicaid: States Use Illusory Approaches to Shift Program Costs to 

Federal Government, GAO/HEHS-94-133 (Washington, D.C.: Aug. 1, 1994). 

Page 32 GAO-05-748 Medicaid Contingency-Fee Consultants
appropriate methods for claiming rehabilitation services. CMS had not

published a specific proposal at the time we completed our review.

47

Another factor shared by the reimbursement-maximizing projects we

examined was that they increased Medicaid payments from state Medicaid

agencies to other state or local-government agencies—that is, to nonMedicaid agencies that may serve Medicaid beneficiaries—a mechanism 

that can facilitate an inappropriate shift of state costs to the federal 

government. Medicaid reimbursement to government agencies serving 

Medicaid beneficiaries is allowable in cases where the claims apply to 

covered services and the amounts paid are consistent with economy and 

efficiency. In contrast, the projects and associated claims we reviewed 

showed that reimbursement-maximizing projects often involved services 

and circumstances that Medicaid should not pay for—such as illusory 

payments to government providers. 

Georgia, Massachusetts, and CMS provided limited oversight of claims 

associated with projects developed with the aid of contingency-fee 

consultants to ensure that they were consistent with Medicaid

requirements. The two states’ measures to oversee contingency-fee

projects were insufficient to prevent inappropriate claims, and CMS 

officials were not always aware of states’ specific projects to maximize

federal reimbursement. Problems we found with CMS’s oversight of states’ 

reimbursement-maximizing projects and associated claims illustrate the 

need to address broader financial management issues, especially as more 

states adopt reimbursement-maximizing strategies without hiring 

consultants. 

Georgia and Massachusetts have taken some steps to oversee the 

contingency-fee consultants they have engaged for reimbursementmaximizing projects. Georgia’s oversight was conducted primarily through 

a steering committee, formed by the state in 1999, with project review and 

approval responsibility. Specifics of implementing the projects were 

Limited State and 

CMS Oversight of 

Claims from 

Contingency-Fee

Projects Raises 

Concerns about 

Medicaid Financial 

Management 

States Have Taken Some 

Steps to Ensure 

Appropriate Claims, but 

Problems Remain 

 47The CMS Administrator’s budget for fiscal year 2006 further clarifies CMS’s concern that

states have attempted to shift costs associated with other social service programs to

Medicaid. The budget proposes to clarify allowable services that may be claimed as

rehabilitation. CMS estimates 5-year budget savings of $2 billion from its proposal to clarify

allowable TCM and rehabilitation services. See the Centers for Medicare & Medicaid 

Services’ performance budget for fiscal year 2006. 

Page 33 GAO-05-748 Medicaid Contingency-Fee Consultants
delegated to the state agencies that generated the enhanced 

reimbursements. In some cases, the state Medicaid agency and the 

steering committee disapproved proposed projects because they did not 

comply with Medicaid law or policy. For example, the consultant 

proposed that two state agencies be allowed to bill for TCM for a 

particular client in a given month. The state agency determined that this 

proposal would result in an inappropriate duplicate billing and chose to

allow only one state agency to bill for TCM services per client per month. 

In addition, although Georgia was not required to notify CMS when a new 

project was developed by the state’s consultant—and generally did not do 

so because it believed the authority to implement various projects was 

already included in the state’s existing approved Medicaid plan—on 

occasion, it sought the advice of CMS’s regional office about a project. 

Despite Georgia’s review of the consultant’s proposed projects, however, 

the state’s oversight did not identify problems with some of the projects 

we reviewed. For example, Georgia made several changes in its 

rehabilitation program, including a change in how payment rates to private 

facilities were calculated. As discussed in the rehabilitation services

section of this report, we believe the revised rates were not in accord with 

requirements that payments be consistent with efficiency and economy. 

CMS officials—who had not been asked to approve the states’ revised 

rates—agreed, and during our review began an investigation to determine 

the extent of the problem. 

In Massachusetts, oversight for Medicaid reimbursement-maximizing 

projects has been shared by the state Medicaid agency, which is now in 

the Executive Office of Health and Human Services, and the Office of the

State Comptroller. The Medicaid agency is responsible for ensuring that 

the state’s claims for federal reimbursement are consistent with federal 

requirements. The Comptroller’s office reviews and approves specific 

reimbursement-maximizing projects proposed by the Medicaid agency,

manages the accounts that receive reimbursements generated by the 

projects, verifies and pays the contingency fees, and reports program 

results annually to the state legislature. The Comptroller’s review has 

focused on the financial implications of proposals, more than on program

implications. Recent state legislation authorized the Medicaid agency to 

enter into contingency-fee contracts with UMMS without the Comptroller’s

prior approval and to pay contingency fees up to a ceiling of $30 million 

for state fiscal year 2005.

The Massachusetts Medicaid agency engaged UMMS to perform many

ongoing operational functions of its Medicaid program. In February 2004, 

Page 34 GAO-05-748 Medicaid Contingency-Fee Consultants
when the Executive Office of Health and Human Services was designated 

as the single state Medicaid agency, and staff of the Medicaid and other 

state agencies were relocated under UMMS, UMMS has assisted the state 

Medicaid agency in carrying out many of its functions. UMMS in 2004 had 

major responsibilities for administering significant operational aspects of

the Medicaid program, such as conducting program integrity and 

utilization reviews48 and compiling the state’s Medicaid claims for schoolbased services, including ensuring the appropriateness of such claims.

49 At

the same time, UMMS has also been paid contingency fees by the state 

Medicaid agency for numerous reimbursement-maximizing activities, such 

as those related to school-based claims. 

In addition to its agreements with the Massachusetts Medicaid agency to 

operate portions of the Medicaid program, UMMS also served as a 

contingency-fee consultant to other Massachusetts entities to enhance

federal Medicaid reimbursements. UMMS officials told us that they have 

contracted on a contingency-fee basis with about 86 of the state’s 356 local

school districts to develop their school-based Medicaid administrative 

claims and with about 75 local districts to develop school-based health

services claims. UMMS therefore administers significant operational 

aspects of the state’s system for school-based Medicaid services, including 

overseeing the appropriateness of claims, and acts as a contingency-fee 

consultant to prepare some of those claims for some school districts.50 In

 48State Medicaid agencies are required to implement program integrity and utilization 

reviews to ensure the proper and efficient administration of their programs by preventing, 

detecting, and controlling fraud and abuse. Program integrity reviews focus on ensuring the 

accuracy of payments to providers, including detection and recovery of overpayments that

may result from billing errors, failures in computerized claims processing systems, or 

fraud. Utilization reviews generally include surveillance and analysis of Medicaid serviceuse patterns to ensure that the services are used appropriately, according to the state 

Medicaid plan, and that beneficiaries are not receiving either too many or too few services. 

49Among several provisions in the interdepartmental services agreement for school-based 

services, UMMS agreed to “[e]stablish and maintain procedures for claiming medical

service costs related to Medicaid spending at local schools”; “establish and maintain

procedures for claiming costs at local schools associated with the administration of the 

Medicaid program”; “review and perform quality-control measures on local school cost

information, prior to the compilation of such data for the quarterly submission to CMS”; 

and “make quarterly policy and program recommendations to EOHHS for the school based

provider group.”

50Under its agreement to administer the state’s school-based services program, UMMS is

responsible for establishing procedures and training district staff, reviewing and submitting

claims, and compiling administrative costs. For this work, UMMS is paid a contingency fee 

of 1 percent of federal reimbursements generated, up to $950,000 per fiscal year, and it is

reimbursed for 50 percent of its costs via the state’s Medicaid administrative claims. 

Page 35 GAO-05-748 Medicaid Contingency-Fee Consultants
audits of Massachusetts’s claims for school-based health services, HHS 

OIG cited inadequate oversight by both the state Medicaid agency and 

UMMS. HHS OIG audited health claims and administrative expenditures

from eight school districts and found improper claims in both categories.51

In our view, this dual role—assisting with Medicaid program

administration, including quality control, and consulting with local school

districts on a contingency-fee basis—creates an appearance of conflict of

interest for UMMS, raising questions about UMMS’s incentives for 

ensuring that claims for federal Medicaid reimbursement are appropriate.52

The oversight measures that Massachusetts Medicaid officials told us they 

had in place to ensure that reimbursement-maximizing claims compiled by 

UMMS were consistent with federal requirements were insufficient to

prevent inappropriate claims. The officials told us, for example, that they 

relied on edits in the state’s Medicaid Management Information System—

the computer system that processes provider claims for payment—to

ensure that the processed Medicaid claims were allowable. According to 

the CMS financial management officials who reviewed Massachusetts’s 

claims, however, claims from some reimbursement-maximizing projects 

were not subject to computer-based edits. The officials estimated that

about 30 percent of the state’s Medicaid claims, including some of those 

for managed care and supplemental payments, are processed off system—

that is, not through the state’s computerized Medicaid Management

Information System—and these off-system claims pose a greater concern, 

they told us, because inaccuracies are more common in them. 

CMS did not routinely review projects in Georgia and Massachusetts that 

used contingency-fee consultants and in fact was unaware of some of the 

specific projects to increase federal reimbursements that we reviewed. 

CMS oversight of such projects and the associated claims was limited 

because the agency did not routinely request that states indicate on state 

plan amendments or expenditure reports whether consultants were 

involved in their development. CMS officials told us they relied primarily 

CMS Has Limited 

Oversight of ContingencyFee Projects and 

Associated Claims 

 51See HHS OIG A-01-02-00009 (July 14, 2003), and HHS OIG A-01-02-00016 (Sept. 15, 2004). 

52We identified another potential concern, outside the scope of our review, related to

UMMS subcontracts with an organization with which UMMS officials were affiliated. Three 

UMMS officials sit on the boards of directors of two related nonprofit corporations. In state

fiscal years 2003 and 2004, UMMS paid one of these related corporations more than 

$2.4 million for subcontracted work. We notified CMS regional officials of our concerns. 

Page 36 GAO-05-748 Medicaid Contingency-Fee Consultants
on the states to ensure that projects and claims were appropriate. 

Although CMS surveyed its regional offices in fiscal year 2004 to identify 

contingency-fee consultant projects by state, our work in Georgia and 

Massachusetts identified more projects developed with assistance from

contingency-fee consultants than CMS’s survey reported. CMS officials 

told us that they became aware of Georgia’s contract with its consultant 

when a local newspaper reported a dispute between the state and the 

consultant. CMS officials overseeing the Massachusetts Medicaid program

told us they had not examined the relationships between the Medicaid

agency and UMMS, but they told us that during the time of our review they

had asked HHS OIG to investigate the appropriateness of the state’s 

Medicaid administrative claims, which included those attributable to

UMMS. HHS OIG’s investigation was under way when we completed our 

work.

CMS has stated that it lacks authority to require states to disclose 

contingency-fee arrangements when states are not seeking federal 

reimbursement for the fees. CMS officials clarified, however, that they can 

request information about the assistance of a contingency-fee consultant 

when agency officials are reviewing state submissions such as state plan 

amendments, cost allocation plans, or expenditure reports. Officials said

that they did not routinely request such information in conjunction with

these reviews. In Georgia and Massachusetts, we found CMS reviews 

limited in the extent to which they identified concerns with contingencyfee projects and associated claims in three areas:

• CMS review of state plan amendments: Because states’ proposals for 

changes to their state plans through amendments might be general in 

nature, CMS may not have details to identify the specific changes that 

would increase claims. Georgia, for example, did not submit a state plan 

amendment about its project to increase payment rates for rehabilitation 

services to children in the state’s juvenile justice and child protection 

systems because it had concluded that it could change how it claimed 

Medicaid reimbursement without changing the state plan section that

authorized the payments. When we discussed this example with CMS 

officials, they told us that when a state’s plan is broadly written, the state 

may not always submit amendments to change the plan provisions. The 

CMS officials told us that even in cases where a contingency-fee 

consultant was involved in drafting a state plan amendment—for example,

to establish new coverage or payment rates—they might not be aware of a 

Page 37 GAO-05-748 Medicaid Contingency-Fee Consultants
consultant’s involvement because states do not routinely disclose this 

information to CMS.

53

• CMS review of cost allocation plans: As previously discussed, 

Massachusetts did not submit a complete draft cost allocation plan to

CMS, reflecting its major reorganization, until December 2004. As of April 

2005, the revised cost allocation plan had not been approved. CMS officials 

did not explain why Massachusetts was allowed to continue claiming 

federal Medicaid reimbursement for administrative costs on the basis of an

outdated cost allocation plan, other than to say that several other states

did not have current plans. Massachusetts’s officials told us they did not 

expect major changes as a result of the revised cost allocation plan, but 

the extent of any changes cannot be verified until a revised plan is

approved. 

• CMS review of Medicaid quarterly expenditure reports: Nothing in

the quarterly expenditure report indicates when a contingency-fee 

consultant has assisted in developing specific categories of claims, making

it difficult to identify such claims. CMS regional financial analysts

responsible for reviewing Massachusetts’s expenditure reports told us that

it was standard practice to defer payment to allow further investigation of 

any claims for new services when they knew that a consultant had been 

involved.

54 In such cases, they requested and analyzed further information

from the state. The ability of CMS regional officials to identify potential 

problems with states’ claims by analyzing quarterly expenditure reports

was limited. Regional CMS officials responsible for Massachusetts told us 

they used standard trend and variance analyses to review the reports and 

also conducted some analyses of their own, but they were not confident

that these reviews were adequate to identify problems. CMS regional 

analysts are able to conduct only a few focused reviews each year of

potential problems with states’ claims identified through their analyses of

the quarterly expenditure reports, and, they told us, random reviews are 

not feasible.

55

 53Another problem with state plan amendment reviews, which CMS has taken steps to

rectify, arose because regional offices used to have responsibility for reviewing and 

approving state plan amendments, and review criteria were not always consistently applied

among the regional offices. Since July 2002, CMS has taken several actions to centralize its

reviews and approvals of many state plan amendments. 

54The officials also told us that since 2004, any deferrals of claims must be approved by the 

CMS central office. 

55When regional CMS officials identified an area of concern, they told us they typically

referred it to the regional OIG office for in-depth audit; each regional office can conduct

only a few focused reviews each year to quickly assess the nature and scope of potential

problems.

Page 38 GAO-05-748 Medicaid Contingency-Fee Consultants
In the CMS regional offices managing Medicaid claims from Georgia and 

Massachusetts, available agency resources—especially in terms of 

experienced analysts relative to the scale and variety of claims—have

constrained the conduct of financial reviews. Although Georgia claims

federal Medicaid reimbursements totaling approximately $1.7 billion per 

quarter, CMS has had only one financial analyst assigned to review those 

claims; for Massachusetts, three CMS analysts are responsible for

reviewing quarterly claims of more than $2 billion.

Our work in Georgia and Massachusetts also identified an area where 

consultants were advising states and where CMS does not have any 

oversight mechanism. CMS does not review the payment rates that state 

agencies other than the Medicaid agency bill to the Medicaid program for 

services such as TCM. In Massachusetts, each of the four non-Medicaid 

agencies providing TCM services developed its own rate for billing the 

services to Medicaid, in some cases with the assistance of the agency’s 

consultant. In state fiscal year 2004, these four agencies billed Medicaid a 

monthly fee for TCM services that ranged from $178 per person in the 

Department of Mental Retardation to $454 in the Department of Youth 

Services, according to state officials. Although CMS approved a general

rate-setting provision as part of the original state plan amendments for 

these agencies’ case management services, the actual payment amounts 

are generally reviewed and approved only by a division of the 

Massachusetts Medicaid agency. CMS does not review these stateapproved payment amounts, and the HHS Division of Cost Allocation 

reviews cost allocation plans related only to administrative, not service, 

claims. 

Page 39 GAO-05-748 Medicaid Contingency-Fee Consultants
The concerns we identified with the appropriateness of states’ Medicaid 

claims stemming from contingency-fee projects illustrate the urgent need

to address the issues we have identified with CMS’s overall financial 

management of the Medicaid program.

56 We identified problems with

claims in states other than Georgia and Massachusetts that have 

undertaken reimbursement-maximizing activities, without employing 

consultants, in categories of long-standing concern, such as supplemental

payment arrangements. In March 2004, for example, when one state 

sought consultants for reimbursement-maximizing services for Medicaid 

and other programs, the proposed scope of work specifically excluded 

activities that the state already had under way, including Medicaid UPL 

claims, school-based administrative and service claims, eligibility for

foster children, and TCM services.57 CMS and HHS OIG officials in the 

Atlanta regional office told us about reimbursement-maximizing projects

in two states in the region that were developed without the use of

consultants. 

CMS relies on its standard financial management controls to identify or 

correct any unallowable Medicaid claims that states may submit, including 

those that might be associated with reimbursement-maximizing

contingency-fee projects. In assessing the appropriateness of claims 

generated from contingency-fee projects in Georgia and Massachusetts, 

we found other examples of potentially unallowable claims that CMS’s 

financial management controls had failed to uncover. For example, when 

we discussed Georgia’s contingency-fee project for rehabilitation services, 

CMS officials not only agreed with our assessment that the additional

reimbursements from the project were inconsistent with federal law, but

also identified concerns about whether the state agencies and facilities

Problems Illustrate Need 

to Improve the Financial 

Management of Medicaid 

 i i : l 56See, for example, GAO, Medica d Financ al Management Better Oversight of State C aims

for Federal Reimbursement Needed, GAO-02-300 (Washington, D.C.: Feb. 28, 2002). This

report found that CMS’s systems for financial oversight of state Medicaid programs were

limited. We recommended a range of approaches to strengthen internal controls and target

limited resources, including that CMS revise its existing risk-assessment efforts to more

effectively and efficiently target oversight resources to areas most vulnerable to improper

payments. An ongoing GAO review is assessing CMS’s progress in implementing related

recommendations. Also, in a 2004 report on state financing schemes (see GAO-04-228) we

recommended that CMS improve oversight of state UPL projects, including issuing

guidance to states and setting forth acceptable methods to calculate UPLs. These 

recommendations remain open. 

57See The State of Arizona Request for Proposals for Revenue Maximization Services, 

Solicitation # AD040501, as amended, https://spirit.az.gov/applications/spirit./pro.nsf/ 

docnum/adsm-5xfr40?open (downloaded May 20, 2005). 

Page 40 GAO-05-748 Medicaid Contingency-Fee Consultants
were qualified providers, cost estimates were appropriate, and all services

were covered by Medicaid.

58 Similarly, we identified Medicaid billing 

concerns in Massachusetts that did not stem from the contingency-fee 

projects: 

• One state agency—the Department of Mental Retardation, which was not 

assisted by a contingency-fee consultant—was billing Medicaid for TCM 

services without appropriate documentation. According to department

officials, the agency automatically bills Medicaid a monthly fee of $178 for 

each Medicaid-eligible beneficiary in its TCM caseload. The department 

does not verify its billing records with its case managers’ records to ensure

that each beneficiary received a covered service each month. Automatic 

billing for case management services is not allowed under Medicaid: to

claim federal reimbursement, states must document a specific service 

delivered on a specific date.59 The Department of Mental Retardation 

received about $19 million in federal reimbursement for its TCM claims in 

2004, according to state officials. In commenting on a draft of this report, 

state officials acknowledged that contacts with clients do not necessarily

occur each month and that the Department of Mental Retardation’s billing 

for TCM was an area for improvement. Officials said that a new

management information system planned for state fiscal year 2006 would 

allow electronic documentation of contacts with clients and automated 

verification during the billing process. 

• Three other Massachusetts agencies—the Departments of Social Services, 

Youth Services, and Mental Health—billed Medicaid for TCM services even

though the agencies could have been serving some of the same

beneficiaries. A foster child served by the Department of Social Services, 

for example, could also be a juvenile offender served by the Department of 

Youth Services. State Medicaid officials permitted each state agency to bill

Medicaid for TCM services and told us they did not consider this practice

duplicate billing, because they believed the agencies provided different 

services. The officials told us that the CMS-approved state plan 

amendments authorizing TCM services for these agencies would show that 

the services differed. Our review of the documents provided by state 

officials, however, showed that for two agencies, the TCM service 

 58Federal Medicaid reimbursements to the state in fiscal year 2003 for these services totaled

about $38 million. 

59Documentation for TCM claims must include the date of service; name of recipient; name

of provider agency and person providing the service; nature, extent, or units of service; and 

place of service. See Section 4302.2 (L) of the State Medicaid Manual.

Page 41 GAO-05-748 Medicaid Contingency-Fee Consultants
descriptions were identical

60 and for all four agencies, including the 

Department of Mental Retardation, the service descriptions were similar.61

State officials acknowledged that overlap in eligibility occurred among the 

agencies but said they were unaware of the number of Medicaid 

beneficiaries for whom two or more TCM services were claimed per 

month or the amount of reimbursements claimed for those beneficiaries. 

In Georgia, in contrast, only one agency is allowed to bill for TCM services

in a given month for a given beneficiary. 

CMS lacks clear, consistent policies to guide the states’ and its own 

financial oversight activities. Furthermore, CMS officials have expressed 

concerns about the agency’s ability to review states’ activities in all highrisk areas that the agency has identified. We found that CMS has known 

for some time that two high-risk categories we identified—claims 

generated from consultants paid on a contingency-fee basis to maximize

reimbursements and claims generated from arrangements where state 

Medicaid programs are paying other state agencies or government 

providers—were problematic. For example, CMS had listed these two 

categories on a financial tracking sheet of high-risk areas as of 2000.62 At

an October 2003 congressional hearing, the CMS Administrator expressed 

concern that the Medicaid program was understaffed and that consultants 

 60Specifically, the state plan sections for both the Department of Youth Services and the 

Department of Social Services defined TCM services in exactly the same language to

include the following case manager activities: “collection of assessment data; development

of an individualized plan of care; coordination of needed services and providers; home

visits and collateral contacts as needed; maintenance of case records; and monitoring and

evaluation of client progress and service effectiveness.” (Collateral contacts include family

members and others involved in the beneficiary’s care.)

61For example, all four state agencies covered TCM services whose purpose was facilitating

clients’ access to services, conducting assessments or collecting assessment data, and

monitoring and evaluating client progress.

62In 2001, CMS asked each regional office to complete a risk assessment to identify the

extent to which states in each region had attributes warranting closer CMS financial

oversight and scrutiny. The identified risk factors that regional staff were asked to assess

included areas where federal policy was unclear, states’ use of a contingency-fee 

consultant to maximize reimbursements, and payments to public providers in which state 

Medicaid agencies may lack an incentive to monitor and control expenditures. Regional

officials were to base their assessment of these and other risk factors on their working 

knowledge of each state. 

Page 42 GAO-05-748 Medicaid Contingency-Fee Consultants
in the states were “way ahead of” CMS in helping states take advantage of

the Medicaid system.

63

CMS has undertaken several important steps to improve its financial

management of the Medicaid program. A major component of the agency’s 

initiative is hiring, training, and deploying approximately 100 new financial

analysts, mainly to regional offices. These analysts will be responsible for 

identifying state sources of Medicaid funding and contributing to the 

review of state budget estimates and expenditure reports. As of April 2005, 

CMS reported that 85 new financial analysts had been hired for the 

regions, and 10 new analysts were on duty in the central office. According 

to CMS, the new analysts have received initial training in the central office;

two meetings per year are planned to bring all new analysts together for 

continuing education; and monthly conference calls take place with all 

new analysts and regional and central office officials. In addition, each 

region has its own conference call every 2 weeks with officials of CMS’s 

new Division of Reimbursement and State Financing. This new division, 

which was created in January 2005 to centralize and coordinate federal 

oversight of Medicaid reimbursement and financial issues, comprises the 

two nationwide review teams for state plan amendments and the 10 new

central office funding specialists. Expectations for the new division and its

analysts are high and their responsibilities broad; it is too soon, however, 

to assess their overall accomplishments. 

Because of its size, complexity, and federal-state structure, the Medicaid 

program has been subject to waste, abuse, and exploitation. Our work has 

found that projects developed by consultants who are paid a fee 

contingent upon additional federal reimbursements that they generate

pose a financial risk to the program. It is not possible, however, to quantify 

the magnitude of this financial risk, because CMS does not routinely

request information regarding states’ use of contingency-fee consultants to

assist with reimbursement-maximizing projects and associated claims. 

Reimbursement-maximizing projects have generated huge reimbursements 

for states—more than $2 billion in total over a 5-year period for the two 

states we reviewed. Large reimbursements such as these place heavy 

Conclusions 

 l

i t i itt

itt

63Thomas Scully, Administrator, CMS, responding to questions at a hearing, Cha lenges

Facing the Medica d Program in the 21s Century: Hear ng before the Subcomm ee on

Health, House Comm ee on Energy and Commerce, 108th Cong., 1st Sess., Oct. 8, 2003. 

Page 43 GAO-05-748 Medicaid Contingency-Fee Consultants
responsibility on CMS to monitor the many complex financing 

arrangements and claims arising from contingency-fee consultants’

reimbursement-maximizing activities. The concerns we have identified 

with claims from consultants’ projects and concerns with states’ 

submitting claims that have not been reflected in state plan amendments 

and cost allocation plans illustrate the urgent need for CMS to address 

certain issues in its oversight of states’ contingency-fee consultant projects 

and in its overall financial management. In addition, many of the 

problematic financing arrangements we examined involved payments to 

units of state and local government—which states have long used to 

maximize federal Medicaid funding—suggesting that greater CMS 

attention is needed to payments among these units, regardless of whether

consultants are involved.

For more than a decade, we have reported on the various methods some

states have used to inappropriately maximize federal Medicaid 

reimbursement and have made recommendations to end such schemes. 

CMS has taken several steps to respond to our recommendations and to 

address other issues it has identified, including taking steps to hire 100 

new financial analysts and developing budget proposals for fiscal year 

2006 to clarify policies for allowable claims in several high-risk areas. 

Nevertheless, specific proposals have not yet been set forth, approved, or 

implemented. We continue to encourage CMS to take steps to identify and 

curb opportunistic financing schemes before they become a staple of state 

financing, and further erode the integrity of the federal-state Medicaid 

partnership, and to do so in a manner that ensures that policies are clear 

and consistently applied. With regard to specific projects we examined for 

this report, we commend CMS and HHS OIG for steps they have taken to

examine claims from these projects, including the potential for identifying 

unallowable claims that may involve recovery of federal funds. In addition,

addressing our prior recommendations to Congress and CMS that remain

open could also help resolve some of the issues identified in this report.

• Because states continue to take advantage of financing schemes relying on 

payments to units of state and local government, we believe that our 

earlier recommendation to Congress—to prohibit Medicaid payments to

government providers that exceed their costs—is still valid and would

help safeguard federal Medicaid funds.64

 64GAO/HEHS-94-133. 

Page 44 GAO-05-748 Medicaid Contingency-Fee Consultants
• Because states, often with the assistance of consultants, continue to make 

illusory payments by establishing excessive UPL payment arrangements, 

we reiterate three earlier recommendations that remain open: that the 

Administrator of CMS (1) establish uniform guidance for states, setting

forth acceptable methods to calculate UPLs; (2) expedite financial 

management reviews of states with UPL arrangements;65 and (3) improve 

state reporting on these arrangements.66

States should not be held solely responsible for inappropriately seeking 

reimbursements where policies have not always been clear or clearly 

communicated. Although CMS has taken steps in recent years to minimize 

the federal financial risk involved in inappropriate financing schemes, the 

agency must also ensure that its policies are clear and consistently applied 

across states. Otherwise, CMS is at risk of treating states inconsistently

and of placing undue burdens on states to comply. Because of the 

potential for a significant financial impact on states that may have relied 

on excessive federal funding for certain services, those states found out of

compliance with CMS policy may need to be granted a transition period 

for coming into compliance with clarified CMS requirements. 

To improve CMS’s oversight of projects involving contingency-fee 

consultants and any associated claims for federal Medicaid 

reimbursements, we recommend that the Administrator of CMS take the 

following two actions: 

Recommendations for 

Executive Action

• Routinely request that states disclose their use of contingency-fee 

consultants when submitting state Medicaid documents, such as state plan

amendment proposals, cost allocation proposals, and expenditure reports, 

and, in the event that states do not voluntarily provide this information, 

seek legislative authority to require disclosure. 

• Enhance CMS review of state Medicaid documents for which states have 

used a contingency-fee consultant and take appropriate action to prevent

or recover federal reimbursements associated with unallowable claims. 

 65In commenting on a draft of this report, CMS said that its fiscal year 2005 work plan

includes plans to conduct many of these reviews.

66GAO-04-228. 

Page 45 GAO-05-748 Medicaid Contingency-Fee Consultants
To strengthen CMS’s overall financial management of state Medicaid

activities, we recommend that the Administrator of CMS take the 

following five actions: 

• Require that states identify—in Medicaid-related documents such as state 

plan amendments and expenditure reports—arrangements or claims for 

payments that involve payments to units of state or local government, such

as state- and local-government-owned or -operated facilities. 

• Enhance CMS review of states’ Medicaid documents, such as state plan

amendments, cost allocation plans, and expenditure reports, specifically 

reviewing payments states make to units of government, including the 

methodology behind payment rates to government units and the basis for 

any related claims, and take appropriate action to prevent or recover 

unallowable claims. 

• Establish or clarify and then communicate CMS policies on TCM, 

supplemental payment arrangements, rehabilitation services, and Medicaid

administrative costs and ensure that the policies are applied consistently 

across all states. 

• Ensure that states submit cost allocation plans as required and establish a 

procedure for their prompt review. 

• On the basis of the findings of this report regarding specific projects and 

billing practices, follow up with states’ associated claims and recover 

federal reimbursements of unallowable claims as appropriate in Georgia 

and Massachusetts. 

We provided a draft of this report for comment to CMS, Georgia, and 

Massachusetts. Each provided written comments, which we summarize 

and evaluate below.

CMS commented that the draft report did not accurately reflect the many 

activities the agency has taken to address the issues raised in the report 

and that recommendations in the report have already substantially been 

met. CMS believes that many of the problems that the draft report

highlighted, including those with the projects in the five high-risk 

categories of claims that we selected to review in Georgia and

Massachusetts, were already known to CMS as problematic. For example, 

CMS said that the five high-risk categories we cited were highlighted in the 

President’s budget for fiscal year 2006 as areas in need of reform. CMS 

discussed many steps it had taken in recent years to improve the financial

management of Medicaid, which it said were omitted from the report.

Agency and State 

Comments and Our 

Evaluation 

CMS’s Comments and Our 

Evaluation 

Page 46 GAO-05-748 Medicaid Contingency-Fee Consultants
Although CMS stated that federal dollars have been supplanting state 

dollars and that the Medicaid program is unquestionably paying for things

it should not pay for, the agency also said it was addressing this problem

through work with individual states to reach agreements to ensure use of

appropriate financing mechanisms and to end inappropriate ones. 

We acknowledge that CMS has taken important actions in recent years to 

improve the financial management of Medicaid. We believe our draft 

report recognized these efforts, including CMS’s creation of the central

financial review body called the Division of Reimbursement and State 

Financing, and on the basis of CMS’s comments, we have added further 

information to the report. We also acknowledge that we selected the two 

states in our review, Georgia and Massachusetts, because of the wide 

variety of contingency-fee projects in these states that CMS’s survey had 

identified, including projects in areas where claims were thought to be at

high risk or growing in dollar amounts in recent years. Although CMS 

suggested that the scope of our work was limited to these two states, we

did draw upon our prior work and that of HHS OIG to extend our findings. 

Moreover, we believe that conducting detailed work in two states helped 

us identify systemic issues extending well beyond these two states. We 

further note that we established the scope of our work, including areas we

considered to be high risk, before publication in 2005 of the President’s 

fiscal year 2006 budget that reflected CMS’s initiatives for improving its

policy in these same high-risk categories of claims. We believe this nexus 

of our work and CMS’s stems from our shared objective of protecting 

Medicaid’s fiscal integrity. At the same time, we also note that we have 

raised concerns about certain inappropriate financing methods in these

high-risk areas for many years, that some prior recommendations remain 

open, and that problems remain. In addition to the important steps CMS 

has taken in recent years to improve its policies and oversight, we believe 

that more can and should be done to better ensure the program is

operating as Congress intended—that is, as a shared federal-state 

partnership providing health care resources for covered services for 

eligible beneficiaries. 

CMS also commented on our specific recommendations, and these 

comments are summarized, along with our response, below.

• Regarding our recommendations for improved agency oversight of states’

use of contingency-fee consultants, CMS stated that it does not have 

authority to require states to disclose their use of contingency-fee 

consultants, although it believes it can request such information.

Consequently, we have adjusted our recommendation to suggest that CMS 

Page 47 GAO-05-748 Medicaid Contingency-Fee Consultants
routinely request, rather than require, that states disclose such 

information, and seek legislative authority to require such disclosure if

states do not do so. CMS also stated that it recognizes that contingency-fee 

consultants are a potential risk factor and that it is committed to fully 

assessing the basis for claims in accordance with all relevant 

requirements. 

• Regarding our recommendations that CMS take certain steps to improve 

its overall financial management of state Medicaid activities, including 

taking certain steps to improve oversight of states’ claims for payments 

made to units of government, CMS discussed its initiative started in August

2003. Under this initiative, CMS requests information from states on their 

financing methods and terminates those that the agency deems are not 

consistent with the statutory federal-state financial partnership. CMS said

that, as of June 10, 2005, 23 states had agreed to terminate one or more 

financing practices. Although our draft report acknowledged that CMS had

undertaken this effort, we have added further information to the report 

about CMS’s initiative. We maintain, however, that CMS’s current state-bystate approach to reviewing states’ financing methods—by examining 

them when states submit proposed state plan amendments and obtaining 

agreement from states to end them—does not ensure that its policies are 

clear to states or are consistently applied. For example, a state’s financing

methods may not be reviewed if the state does not submit a proposed state

plan amendment. We maintain our position and associated 

recommendations that CMS do more to clarify, communicate, and 

consistently apply its policies regarding areas that both CMS and we have 

identified as high risk. 

• Regarding our recommendation that CMS establish or clarify and 

communicate its policies on TCM, supplemental payment arrangements, 

rehabilitation services, and Medicaid administrative costs and ensure that

the policies are applied consistently across states, CMS responded that the 

fiscal year 2006 President’s budget proposals would do so. Our draft report

acknowledged these proposals but also noted that the specific proposals

had not been released as of June 2005. In the absence of concrete

proposals and actions to implement them, we believe our recommendation

remains valid. 

• Regarding our recommendation that CMS ensure that states submit cost

allocation plans as required, CMS cited existing requirements for states to 

submit cost allocation plans. CMS’s comments were not fully responsive 

because our recommendation did not address the need to develop new

requirements but to ensure compliance with existing requirements. We

therefore maintain this recommendation. 

Regarding our recommendation from prior work that Congress prohibit

Medicaid payments to government providers that exceed their costs, CMS 

Page 48 GAO-05-748 Medicaid Contingency-Fee Consultants
noted that it included this proposal in the President’s fiscal year 2006 

budget. Regarding our prior recommendation that CMS take steps to

improve its oversight of states’ UPL arrangements, CMS noted its current 

state plan amendment review process and its financial management 

review plan for fiscal year 2005 to review high-risk UPL arrangements as

examples of how it has already responded to our prior recommendations. 

Our draft report described CMS’s proposal, which parallels the

recommendation we made to Congress in 1994,67 and CMS’s initiative. We 

revised the report to acknowledge CMS’s plans to implement our earlier 

recommendation to review high-risk UPL arrangements and note that not

all specific recommendations have been implemented. 

Regarding our discussion in the draft report about our recommendation 

from prior work that CMS should more effectively and efficiently target

oversight resources toward areas most vulnerable to improper payments, 

CMS strongly disagreed that its current approach is not effective, and it

listed numerous actions it has taken since our 2002 report making these

recommendations. We agree that CMS has taken numerous actions since 

2002. Because we have an ongoing review of CMS’s financial management 

of Medicaid related to our 2002 report findings, we revised the report to 

remove references to our earlier recommendations. 

See appendix III for CMS’s written comments. 

Georgia and Massachusetts commented on the importance of contingencyfee contracts and states’ use of consultants in helping states secure 

resources they otherwise would not have. Massachusetts commented that

seeking federal resources for people in need when those resources are 

lawfully available is the fiscally responsible thing for states to do. The 

state noted that nothing in law prohibits contingency-fee contracts and 

that in themselves, “contingency-fee contracts do not let states off the 

hook for determining what is and what is not appropriate under Medicaid.” 

Georgia commented that the complexity of the Medicaid program can and 

does compel states to turn to expert consultants for assistance and said 

that the report inaccurately suggests that states’ use of contingency-fee 

consulting is somehow illegitimate. We acknowledge that use of

contingency-fee contracts is allowed under law and that states can employ 

consultants for a number of valid Medicaid purposes, and our report has 

State Comments and Our

Evaluation 

 67See GAO/HEHS-94-133. 

Page 49 GAO-05-748 Medicaid Contingency-Fee Consultants
made these points. Our key findings, however, focus on the need to ensure 

that financing methods and associated claims that stem from contingencyfee projects are consistent with federal law, policy, and the fiscal integrity

and federal-state partnership of the Medicaid program. Our work 

identified concerns with claims from contingency-fee projects that were

problematic in these respects. 

The two states also commented that the language of the law related to

coverage of the categories of claims we reviewed—rehabilitation, targeted

case management, Medicaid administration, school-based services, and 

supplemental payments—is broad or complex, and they suggested that 

they have made good-faith efforts to comply with ever evolving federal 

regulations and policy. Both states believe that their claims comply with 

the law. Regarding claims for payments made above what the state was 

paying individual facilities for rehabilitation services, Georgia indicated 

that one specific example we provided was an exceptional case. 

Nevertheless, when we sought clarification from the state on its 

comments, the state’s explanation did not address our overall concern

about the underlying method for setting Medicaid payment rates. We 

revised the report to reflect the state’s comments and our continuing 

concern. Massachusetts noted that little in the way of regulation narrows

the broad definitions in federal law of covered services; that the state’s 

definitions of what Medicaid covers within the categories of claims we

reviewed fall within long-standing federal interpretations; and that GAO’s 

finding the state’s definitions questionable does not make them illegal or 

improper. 

Massachusetts agreed with our conclusion that CMS policy in many of the 

areas that we reviewed has been unclear, either because it has been 

inconsistently applied, evolving, or is not specific. At the same time, 

although most methods and resulting claims we question may not be

illegal, we believe they are inconsistent with the program’s federal-state 

cost-sharing design, fiscal integrity, or with current CMS policy. For 

example, some methods used by states, in our view, in effect increase the 

federal share of the Medicaid program beyond what has been established

by a formula in law and are therefore inappropriate. In the report, we

clarified the basis for our concerns about problematic projects and 

associated claims we identified. 

Georgia’s and Massachusetts’s written comments, and our more detailed 

responses, appear in appendix IV and appendix V, respectively. State 

officials also provided us with technical comments, which we have 

incorporated as appropriate. 

Page 50 GAO-05-748 Medicaid Contingency-Fee Consultants
As arranged with your office, unless you publicly announce the contents of

this report earlier, we plan no further distribution of it until 30 days after 

its issue date. At that time, we will send copies of this report to the 

Secretary of Health and Human Services, the Administrator of the Centers 

for Medicare & Medicaid Services, and other interested parties. We will

also make copies available to others upon request. In addition, the report 

will be available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff members have any questions, please contact me at

(202) 512-7118. Another contact and major contributors are included in 

appendix VI. 

Sincerely yours, 

Kathryn G. Allen 

Director, Health Care Issues 

Page 51 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix I: Description of

Contingency-Fee Projects Appendix I: Description of Contingency-Fee Referred for Additional Review

Projects Referred for Additional Review 

This appendix addresses three contingency-fee projects that we included 

in but could not fully assess during the time frames of our review. On the 

basis of the information we obtained during our review, we believe that

separate studies of these three projects are warranted. We have referred 

information about these projects to the Centers for Medicare & Medicaid

Services (CMS) and Department of Health and Human Services’ (HHS) 

Office of Inspector General (OIG) for additional review. 

In addition to the projects discussed in this report, the University of

Massachusetts Medical School (UMMS) helped Massachusetts develop 

two supplemental payment arrangements to increase federal

reimbursements. One project involved supplemental financing known as 

disproportionate share hospital (DSH) arrangements, and one involved 

federal Medicaid reimbursement for medical services to inmates of state 

correctional facilities. 

States are required to make DSH payments to hospitals that care for a 

disproportionate number of low-income patients. By statute, hospitals 

qualifying for DSH payments are subject to a limit on the amount of

supplemental DSH payments they may receive.1

 As with upper payment

limit (UPL) arrangements, supplemental payments made to government

providers through DSH arrangements can be illusory: that is, the state can 

benefit from the arrangements by appearing to pay the providers more 

than they ultimately retain and seeking federal reimbursement on the 

excessive payments. In part because of concerns that large DSH payments 

were not being used to support certain hospitals but were instead being 

used for general state financing, Congress passed legislation in 1993 and 

1997 to restrict states’ ability to make excessive DSH payments.2

 After 

these restrictions were put in place, combined state and federal DSH 

payments declined, totaling approximately $14 billion in fiscal year 2003, 

down from $16 billion in fiscal year 1999. 

 1

DSH payments were an early Medicaid payment area subject to inappropriate state 

financing arrangements. As in UPL arrangements, states made unusually large DSH

payments to certain hospitals, which then returned the bulk of the payments to the states. 

In response to these arrangements, Congress capped the amount of DSH payments that 

each hospital could receive and limited the total amount of DSH payments that each state 

could make to all hospitals. See 42 U.S.C. 1396r-4(f) and (g) (2000). 

2

Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, § 13621, 107 Stat. 312, 629-

32; Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4721, 111 Stat. 251, 511. 

Page 52 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix I: Description of

Contingency-Fee Projects

Referred for Additional Review

One Massachusetts contingency-fee project helped the state increase DSH 

supplemental payments made to four state-owned hospitals. 

Massachusetts’s consultant developed projects to take advantage of a 

temporary DSH increase—which increased federal reimbursements by an

estimated $17 million annually. The consultant calculated new DSH limits

under the federal rules,3

 which allowed temporary payments up to 

175 percent of unreimbursed costs. To increase the amount of DSH 

payments the state could make to each hospital, the consultant also helped

the state reduce its standard Medicaid payment rates for services provided

in these hospitals. This action increased the amount of supplemental

payments that the state could make and potentially require the hospitals to 

return. 

A second project involved helping Massachusetts to increase federal

Medicaid reimbursements for medical services to inmates of state 

correctional facilities. Payment records indicated that in state fiscal year 

2002, the state Medicaid agency paid UMMS nearly $300,000 (a 

contingency fee of 6 percent of about $5 million in additional federal

Medicaid reimbursement) for its work on the project. Generally, medical

care for prison inmates is not covered by Medicaid.

4

 HHS OIG reported 

that a contingency-fee consultant in another state, New Jersey, had 

prepared inappropriate claims that New Jersey used to obtain federal 

reimbursement for DSH claims for state prisoners.

5

 Over a 4-year period, 

New Jersey inappropriately claimed more than $11 million in federal 

Medicaid reimbursements for DSH payments made on behalf of prisoners. 

HHS OIG determined that these payments were unallowable because the 

state’s Medicaid plan specifically prohibited DSH payments for inmate 

hospital care. Because medical care for prison inmates can be covered by 

Medicaid under certain circumstances, we sought additional information 

from Massachusetts officials to determine if Massachusetts’s arrangement 

was allowable, but we did not receive information within the time frames 

of our review. 

 

l

i

,

3

In 2000, Congress generally increased the DSH limit for certain hospitals from 100 percent

to 175 percent of unreimbursed costs, for a 2-year period effective as of state fiscal years

beginning after September 30, 2002. See Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act, Pub. L. No. 106-554, App. F, § 701(c), 114 Stat. 2763A-463, 

2763A-571. 

4

See 42 C.F.R. 435.1008(a)(1).

5

HHS OIG, Review of Acute Care Hospita Prison Inmate Expenditures Claimed by New 

Jersey to the D sproportionate Share Hospital Program for the Period July 1, 1997, through 

June 30 2001, A-02-02-01028 (Washington, D.C.: Jan. 9, 2004).

Page 53 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix I: Description of

Contingency-Fee Projects

Referred for Additional Review

In addition to the contingency-fee projects in Georgia discussed in this

report, Georgia’s consultant also helped the state seek additional federal 

reimbursements for administrative costs. In particular, the state Medicaid 

agency began claiming federal reimbursement for the costs of certain

activities carried out by county public health departments. Using a rate

developed by the consultant, the Medicaid agency claimed reimbursement 

for the costs of a variety of health department activities serving the public, 

including school-based presentations, presentations to community groups, 

mass health screening events, public information campaigns, and events 

mobilizing community partnerships.

6

 Costs associated with general health

education programs promoting healthy lifestyles are not allowable under 

Medicaid, even if a portion of the participants served by the program are 

on Medicaid. The state’s description of the activities for which claims were 

made raised questions, but we did not receive information we needed 

within the time frame of our review to make a full assessment. 

Because we believe that separate studies of these three projects would be 

required to assess their appropriateness, we have referred information 

about these projects to CMS and HHS OIG for additional review. 

 

:

l

6

We earlier reported a similar concern related to school-based services. In reviewing states’ 

approaches to billing for school-based services, we found that CMS (then called the Health 

Care Financing Administration, or HCFA) had found states inappropriately seeking

Medicaid reimbursement for school-based activities, including general health screenings, 

communication with families, and staff training. HCFA interviews with a sample of staff 

who had charged their time to these activities showed that staff members did not know

what Medicaid covered, where or how to apply for Medicaid, or who might qualify for

coverage. See GAO/HEHS/OSI-00-69. We have also reported a concern that provider

payments for school-based services in several states were not specifically linked to the 

receipt of services because claims for reimbursement were triggered simply by school

attendance. See GAO, Medicaid in Schools Poor Oversight and Improper Payments

Compromise Potentia Benefit, GAO/T-HEHS/OSI-00-87 (Washington, D.C.: Apr. 5, 2000).

Page 54 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix II: Summary of

Selected HHS OIG Reports on

School-Based Claims in States 

Employing Consultants

Appendix II: Summary of Selected HHS OIG 

Reports on School-Based Claims in States 

Employing Consultants 

The Department of Health and Human Services’ (HHS) Office of Inspector 

General (OIG) has completed reviews of school-based claims in 18 states 

from November 2001 through June 2005. Although these reviews were not

specifically targeted at the role of consultants paid on a contingency-fee 

basis, several of the reports found concerns with the appropriateness of

claims from consultants’ projects (see table 4). In fiscal year 2005, HHS 

OIG initiated a review specifically of consultants’ contingency-fee projects 

in all categories of claims. 

Table 4: Selected States’ Consultant Projects Leading to Improper School-Based Medicaid Claims, as Reported by HHS OIG

State and HHS OIG report Consultants’ role HHS OIG finding 

Florida 

Review of Administrative Costs 

Claimed by the Florida 

Medicaid Agency for SchoolBased Health Services, CIN A04-00-02-160 (Mar. 22, 2001)

Consultants were hired by

school districts to handle 

billing for districts’ schoolbased administrative claims 

Improper administrative claims: In state fiscal year 1999, the state 

did not sufficiently oversee school districts’ claims. HHS OIG auditors 

identified more than $10 million in unallowable or insufficiently 

documented costs that were in part allocated to Medicaid. 

Massachusetts 

Medicaid Payments for SchoolBased Health Services—

Massachusetts Division of

Medical Assistance, A-01-02-

00009 (July 14, 2003), and 

Medicaid School-Based Health 

Services Administrative

Costs—Massachusetts, A-01-

02-00016 (Sept. 15, 2004) 

The state Medicaid agency 

contracted with University of 

Massachusetts Medical 

School (UMMS) to administer 

the school-based health 

services portion of state’s 

Medicaid program

Improper health services claims: In state fiscal year 2000, the 

state and UMMS did not adequately monitor claims for school-based

services to ensure the districts’ compliance with federal and state

regulations and guidance, resulting in an estimated $2.9 million in

unallowable federal Medicaid claims.a

 Unallowable claims included 

claims for services that were (1) not documented as delivered; (2) 

provided by unqualified providers; (3) claimed more than once—in 

particular, one district claimed some salaries and fringe benefits 

twice—or (4) provided to students who were absent on the days of

the claimed services. 

Improper administrative claims: In state fiscal years 2000 and 

2001, the state did not monitor the appropriateness of school

districts’ claims developed by UMMS, claiming some salaries and 

fringe benefits twice, resulting in $5 million or more in overstated 

claims. 

Rhode Island 

Medicaid School-Based Health 

Services Administrative

Costs—Rhode Island, A-01-03-

00010 (June 7, 2004) 

The state Medicaid agency 

contracted with UMMS to 

administer the school-based 

health services portion of 

state’s Medicaid program

Improper administrative claims: In state fiscal year 2001, UMMS

did not calculate administrative costs in accordance with OMB 

Circular A-87, and the state did not adequately monitor quarterly 

claims prepared by UMMS. UMMS’s errors both understated and 

overstated school-based administrative costs, resulting in a net 

overpayment of $123,010 in unallowable federal Medicaid claims. 

Washington 

Review of Washington State’s 

Administrative Costs Claimed

for Medicaid School-Based 

Health Services, A-10-01-

00011 (May 29, 2002) 

Consultants were hired by

school districts and paid a 

percentage of the total 

amount claimed; district 

officials relied on consultants 

to ensure proper claiming of

administrative costs 

Improper administrative claims: In state fiscal year 2000, the state 

did not properly implement or monitor the school-based health 

services program, resulting in more than $500,000 in unallowable 

federal Medicaid claims.

Source: GAO based on HHS OIG information.

a

CMS subsequently disallowed $1.2 million in unallowable claims.

Page 55 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Appendix III: Comments from the Centers for Medicare & Medicaid Services

Medicare & Medicaid Services 

Now page 44. 

Page 56 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now pages 20 and 21. 

Page 57 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now page 21. 

Now pages 24 to 27. 

Now page 33. 

Now page 40. 

Now page 43. 

Now page 44. 

Page 58 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Page 59 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now page 45. 

Page 60 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now page 46. 

Page 61 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now page 46. 

Page 62 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now page 46. 

Page 63 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Now pages 44 and 45. 

Page 64 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Page 65 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix III: Comments from the Centers for

Medicare & Medicaid Services

Page 66 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Appendix IV Georgia and GAO’s Response : Comments from the State of 

Georgia and GAO’s Response 

Page 67 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Georgia and GAO’s Response

Page 68 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Georgia and GAO’s Response

Page 69 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Georgia and GAO’s Response

The following is our response to the State of Georgia’s comments. 

Our responses to Georgia’s comments are numbered below to correspond 

with the state’s various points (reproduced on pp. 67–69). Georgia 

generally stated that (1) the state’s claims for targeted case management 

(TCM), rehabilitation services, and supplemental payments were made

under state plan provisions approved by the Centers for Medicare & 

Medicaid Services (CMS) and (2) we incorrectly concluded that the state 

used federal funds generated from reimbursement-maximizing projects to

pay consultants. We have revised the draft to indicate that claims were 

made under approved state plans. Also, we noted in the draft report that

Georgia complied with federal requirements in that it did not claim federal

reimbursement for the contingency-fee payments. As discussed below,

however, state documents indicated that additional federal funds 

generated by reimbursement-maximizing projects were the source of the 

state’s contingency-fee payments to its consultant. 

GAO’s Response to 

the State of Georgia’s 

Comments 

The state provided us with specific comments in five areas, which we

summarize and respond to as follows: 

1. Georgia commented that we were incorrect in contending that CMS 

can or should disallow Medicaid claims for TCM because they are an 

integral part of other state programs. Georgia stated that a statute 

provides that CMS may not deny payment to a state on the basis that

the state was paying for the services from nonfederal funds, and it also

said that CMS had approved Georgia’s state plan amendment to cover 

these services. We based our evaluation of Georgia’s TCM claims on 

CMS’s current policy, including the agency’s actions in disallowing

TCM claims or state plan amendments in other states, and we have 

focused our concerns on the inconsistent application of CMS’s TCM

policy. In applying this policy, CMS had considered arguments similar

to those raised by Georgia, and the CMS Administrator’s decision 

(September 2004) upheld the application of CMS’s current TCM policy. 

Although we did not evaluate the legal basis for CMS’s TCM policy, we

maintain our position that CMS’s policy should be clarified and 

consistently applied among states. 

2. Regarding rehabilitation services, Georgia stated that it has not and is 

not asking for federal matching funds in excess of costs. We disagree. 

We found that in some cases the state agencies’ claims to Medicaid

were based on facilities’ costs exceeding the agencies’ actual payments

to individual facilities. This situation resulted from the agencies’

decision to base claims for payment on the facilities’ estimated costs,

Page 70 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Georgia and GAO’s Response

rather than on the per diem rate they paid to these facilities. According 

to the state, one example described in the report of a Medicaid claim 

that exceeded payments to the facility for all services, was an 

exceptional circumstance. The state also indicated that this

inadvertent practice was ended for all facilities as of April 1, 2004. 

Although we sought clarification from the state on its comments, the 

state did not address our finding that the underlying methods for 

setting Medicaid payment rates was flawed. 

3. Regarding supplemental payments, Georgia asserted that it has 

historically administered its upper payment limit (UPL) program in 

compliance with existing federal regulations and also stated that it has 

agreed with CMS to change the financing of its UPL programs 

beginning in state fiscal year 2006. The state said that, as of July 2005, 

it will no longer continue the practice we described in our draft report. 

We revised the report to reflect the state’s agreement with CMS 

regarding the state’s supplemental payments to government providers. 

4. Regarding school-based claims, Georgia commented that we erred in 

reporting that the state withheld 16 percent of the federal 

reimbursements from the reimbursement-maximizing project involving 

claims for services and administrative costs of schools. The state also 

said the schools receive 100 percent of the federal reimbursements

generated and that state fees, which support the administrative costs 

necessary to ensure that all participating school systems are complying

with program requirements, are paid exclusively from local funds. 

During our review, however, the state provided us a written 

explanation and a spreadsheet showing what was paid to schools, 

indicating that it had withheld 16 percent of the federal

reimbursements from the school-based project and that participating 

schools received 84 percent of the federal reimbursements. 

5. Regarding administrative claims, Georgia commented that we

incorrectly suggested that the state paid its consultants from additional 

federal Medicaid reimbursements generated from contingency-fee 

projects. We disagree. Our conclusion was based on the contract that

the state signed with its reimbursement-maximizing consultant. The 

contract states that the contractor (consultant) acknowledges and 

agrees that no payment is due from the state agencies or the state of

Georgia under the contract from state-appropriated funds. Further, the 

contract explicitly states that the “Contractor’s only source of

compensation shall be funds (in the percentage specified in 

Contractor’s Proposal) generated from Contractor’s performance 

under this Contract.” 

Page 71 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix IV: Comments from the State of

Georgia and GAO’s Response

The state also provided us with technical comments, which we have 

incorporated as appropriate. 

Page 72 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s Appendix V Response : Comments from the 

Commonwealth of Massachusetts and GAO’s 

Response 

Page 73 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Page 74 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 1. 

See comment 2. 

See comment 3. 

Page 75 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 4. 

Now page 12. 

See comment 5. 

See comment 6. 

See comment 7. 

Page 76 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Now page 18. 

See comment 8. 

Now pages 5, 30, and 45. 

Now page 45. 

Now page 19. 

Page 77 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Now page 5. 

Now footnote 43, 

page 31. 

See comment 9. 

Page 78 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 10. 

Now page 23. 

See comment 11. 

Now page 24. 

Page 79 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 12. 

Now pages 27 and 28. 

Page 80 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 13. 

See comment 14. 

Now pages 28 and 29. 

Now page 33. 

See comment 15. 

Page 81 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

See comment 16. 

Now page 41. 

See comment 17. 

Now page 41. 

Page 82 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Now page 53. 

Now footnote 5, page 53. 

Page 83 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

3 

See comment 18. 

Now footnote 3, page 53. 

Page 84 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Page 85 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

Our responses to Massachusetts’s comments are numbered below to

correspond with the state’s various points (reproduced on pp. 73–85). 

Massachusetts generally stated that (1) nothing in the law prohibits

contingency-fee contracts, as long as rates fall within broad requirements

for the efficient administration of Medicaid; (2) contingency-fee contracts 

provide states with resources they otherwise would not have for vital 

administrative tasks; (3) states remain responsible for ensuring 

compliance with Medicaid requirements; (4) Medicaid statute and 

regulations are broadly stated; and (5) states have the responsibility to

seek federal resources to help people in need when those resources are 

lawfully available. The state also provided us with updated information, 

which we have incorporated in our report. 

Massachusetts’s detailed comments and our responses follow.

1. Massachusetts noted that the state’s funding methods differed from the 

typical payment process we describe in the report’s “Background” 

section. We revised the report to reflect that the state advances from

state funds both the federal and nonfederal share of Medicaid

payments and then seeks federal reimbursement for those

expenditures. 

GAO’s Response to 

the Commonwealth of 

Massachusetts’s

Comments 

General Comments 

2. Massachusetts commented that we did not sufficiently distinguish 

between “inappropriate, but lawful” activities and activities that violate 

specific statutes or regulations. We revised the report to clarify our 

concerns related to the projects we examined and to more clearly 

distinguish the basis for our concerns related to the projects that we

reviewed. 

3. Massachusetts commented that it was acting in accord with its state 

plan approved by the Centers for Medicare & Medicaid Services 

(CMS). We revised the report to clarify that CMS had approved 

Massachusetts’s state plan amendments for targeted case management

(TCM) services for each of the four state agencies providing these 

services. We did not, however, assess whether each of the four

agencies’ activities were consistent with the approved state plan. In

addition, we described projects in other states to illustrate the 

inconsistent application of CMS policy. 

4. See response 2. 

Page 86 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

5. Massachusetts commented that we focused too much on increased 

claiming and did not adequately consider the reasons for spending

increases and the role of contingency-fee consultants. We disagree. 

Our presentation of increased federal expenditures was descriptive

and was one factor we considered in selecting categories of claims to 

review. In this section of the report, we drew no conclusions regarding 

the appropriateness of state claims. As we stated in the draft report, 

we agree that consultants can have a legitimate role in helping states

administer their Medicaid programs. 

6. Massachusetts commented that we discussed projects only in five 

selected areas. On the basis of additional information provided by the 

state, we revised our report to include summary financial information 

on other University of Massachusetts Medical School (UMMS)

projects, including third-party liability and coordination of benefits

activities. Nevertheless, in response to the congressional request for

this review, our scope was to include contingency-fee projects in

revenue-maximizing areas; more detailed review of other projects was 

therefore beyond our scope. 

7. Massachusetts commented that contingency-fee payments from one 

state agency to another do not benefit any other party. Our concern is 

not that one state agency may profit from another. Rather, we are 

concerned that the two state agencies operating in concert could 

inappropriately generate additional federal funds.

8. Massachusetts commented that we are applying CMS policies that 

have not been well articulated and that CMS has approved its state 

plan amendments for TCM programs. We use Massachusetts’s TCM

programs to illustrate the difficulties states encounter when dealing 

with unclear CMS guidance and potential disparate treatment by CMS. 

We acknowledge that CMS approved Massachusetts’s state plan 

amendments for its TCM programs and clarified the report

accordingly. Our concern remains, however, that these TCM programs 

do not appear to be consistent with CMS’s current TCM policy and are 

similar to proposals from other states that CMS is currently denying. 

Comments on States’ Use 

of Contingency-Fee 

Consultants 

Comments on Consistency 

of Contingency-Fee 

Projects with Law or 

Policy 

9. Massachusetts commented that we relied on a January 2001 letter as 

CMS policy and that we used criteria—whether the service was 

authorized by state law, regulation, or policy—that appear inconsistent

with provisions of the Technical and Miscellaneous Revenue Act of

1988. We did not rely on CMS’s January 2001 letter as CMS policy. We 

Page 87 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

used the S ate Medicaid Manual (§4302) and the September 2004 

Administrator’s decision (Docket No. 2003-02) as CMS policy in this

area. In addition, because CMS has not defined services that are 

integral to another state program, we used the existence of state law,

regulation, or policy as an indicator, not a determinant, that TCM

services were integral to non-Medicaid programs.

t

10. Massachusetts commented that managed care payments for children 

served by the Department of Youth Services do not include 

rehabilitation provided by state agencies; thus, payments to state 

agencies for rehabilitation services for these children would not be 

duplicative. As described in the draft report, we continue to be 

concerned about the potential duplication of coverage because 

(1) rehabilitation services are included in the statewide managed care 

program, which includes children served by other state agencies, and 

(2) it is unclear whether the Department of Youth Services’ managed 

care rates include rehabilitation services provided by private providers 

(as opposed to state agencies), so Medicaid could be paying both 

private and public providers for the same service. CMS officials agreed 

with our concerns. 

11. Massachusetts did not agree that certain aspects of its upper payment

limit (UPL) arrangement—those the state agreed with CMS to end in 

June 2005—were inappropriate. While the state’s documentation did 

not provide sufficient detail for us to assess the aspects of the UPL 

arrangement that it had agreed to end, we revised our characterization

of the state’s agreement. Nevertheless, we maintain our view that 

illusory supplemental payments in which providers net only a small

portion of the supplemental payments—such as those made in

Massachusetts—are inconsistent with Medicaid’s federal-state

partnership. 

12. Massachusetts commented that it had undertaken a number of efforts

to strengthen oversight of school-based Medicaid claims and provided 

additional information on two reports from the Department of Health

and Human Services’ (HHS) Office of Inspector General (OIG). We 

revised the report to reflect Massachusetts’s efforts to improve 

oversight of its school-based claims. We also revised the report to

clarify that, upon further review, CMS did not impose the full HHS 

OIG–recommended disallowance of $2.9 million but, rather, imposed a 

$1.2 million disallowance. 

13. Massachusetts disagreed with our view that UMMS’s role as a 

contingency-fee consultant working for school districts to prepare 

their claims and as a contingency-fee consultant working for the state

Page 88 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

to monitor school district claims creates the appearance of a conflict 

of interest. On the basis of our discussions with UMMS and state 

Medicaid agency officials and our review of state documents, we

maintain our view but revised the report to more specifically show

UMMS’s role in ensuring the integrity of those claims submitted by 

schools, including reviewing and performing quality-control measures

on local school cost information. 

14. Massachusetts disagreed with our finding in the draft report that

UMMS had inappropriately charged salaries for two senior UMMS 

officials as Medicaid administrative expenditures, providing an 

agreement between the Medicaid agency and UMMS as support.

Regarding one official, we maintain our view that UMMS charged 

excessive time as a Massachusetts Medicaid administrative 

expenditure. Although UMMS charged 100 percent of the official’s 

salary as a Massachusetts expenditure, time sheets provided by the 

state Medicaid agency showed that in some months, the UMMS official 

charged from 2 to 5 percent of his time to “out-of-state” projects. 

Whether the official worked for the Medicaid agency or UMMS, time 

spent on out-of-state projects should not be claimed as a 

Massachusetts Medicaid administrative expenditure. Regarding 

discussion of a second official’s time charges, we removed references

to this official in the report on the basis of additional information 

provided by the state. 

Comments on State and 

CMS Oversight of 

Contingency-Fee Projects 

15. Massachusetts commented that the draft report focused on state

Medicaid agency policy, not operations, and that it disagreed that state 

policies are inappropriate. In our review of individual projects and 

state Medicaid agency oversight, we examined and reported on both

the procedures and the policies the state Medicaid agency had in place 

to oversee the activities of its contingency-fee consultants. We 

maintain our view that some state Medicaid agency policies, such as

those allowing multiple agencies to bill Medicaid for the same service 

for the same beneficiary each month and supplemental payments that

do not fully accrue to providers, are inappropriate.

16. Massachusetts commented that the Department of Mental

Retardation’s contact with clients does not necessarily occur each 

month, although we found the department had automatically billed 

Medicaid for its TCM caseload each month. The state agreed that the 

agency’s billing was an area that can be improved and that a new

management information system planned for state fiscal year 2006 

would allow automated verification of client contacts during the billing 

Page 89 GAO-05-748 Medicaid Contingency-Fee Consultants
Appendix V: Comments from the

Commonwealth of Massachusetts and GAO’s

Response

process. We revised the report to reflect the updated figure for the 

department’s claims in state fiscal year 2004. 

17. Massachusetts commented that its policy of allowing multiple agencies 

to bill Medicaid for TCM services for the same beneficiary each month 

did not constitute inappropriate double-billing. We reviewed

information provided by the state during our review and concluded 

that the state did not provide convincing evidence that the TCM 

services provided by the four state agencies were unique. We 

discussed the matter with CMS and HHS OIG officials, and they 

concurred with our conclusion. We continue to believe that further 

review is needed. 

18. Massachusetts commented that its project for supplemental

disproportionate share hospital (DSH) payments was authorized by

Congress and approved by CMS and that the state disagreed with our 

view that such payments can be illusory. We did not question the 

state’s authority to make supplemental DSH payments up to 175 

percent of unreimbursed costs, consistent with statutory authority to

do so for a 2-year period. Rather, our concern was that hospitals 

should benefit from increased federal reimbursements and 

Massachusetts’s arrangement appeared to result in lower payments to

hospitals, despite increased claims for federal reimbursement. Because 

we did not fully assess the state’s DSH payment process and net 

payments to hospitals, our concerns remain, and we believe that

further review is warranted. 

Page 90 GAO-05-748 Medicaid Contingency-Fee Consultants
A

Ac

ppendix VI: GAO Contact and Staff 

knowledgments

Page 91 GAO-05-748

Appendix VI: GAO Contact and Staff 

Acknowledgments 

GAO Contact Katherine Iritani (206) 287-4820 

Major contributors included Terry Saiki, Tim Bushfield, Jill M. Peterson, 

Ellen M. Smith, Ellen W. Chu, Helen Desaulniers, and Kevin Milne. Acknowledgments 

Medicaid Contingency-Fee Consultants
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(290349) Page 92 GAO-05-748 Medicaid Contingency-Fee Consultants
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