GAO urges CMS to tighten Medicaid eligibility corrective action oversight

The Government Accountability Office issued two open recommendations to the Centers for Medicare & Medicaid Services to improve oversight of state Medicaid eligibility corrective action plans (CAPs). The first directs CMS to ensure that PERM CAPs contain all elements required by federal regulations before acceptance. The second calls for systematic analysis of PERM and MEQC error results and associated corrective actions across states and reporting years.

GAO's review examined PERM reports and MEQC results for reporting years 2019-2025 and CAPs from seven states selected for variation in Medicaid expenditures, enrollment, and error rates. The review found caseworkers were the most prevalent root cause of errors, and specific causes generally fell into four categories. States responded with training, guidance, and eligibility-system updates, yet CMS accepted CAPs that omitted required evaluation elements.

CMS oversees eligibility accuracy through the Payment Error Rate Measurement (PERM) program, which rotates through 17 states on a three-year cycle, and the Medicaid Eligibility Quality Control (MEQC) program. GAO noted that CMS does not systematically analyze CAPs across states and years, limiting its ability to identify widespread issues and to guide states in reducing improper payments.

CMS has agreed with the second recommendation but asked that the first be closed, stating its routine oversight process is sufficient. GAO maintains that additional action is needed because incomplete CAPs have been accepted. The agency's response will be tracked for future updates.