Medicaid is a joint federal-state program that provides medical care for certain poor and low-income people, and the Children’s Health Insurance Program (CHIP) provides coverage mostly for children in low-income families that do not qualify for Medicaid.  Combined, these programs provide health benefits to well over 85 million people at an annual cost of $671 billion.

 

In general, states use two types of payment systems to provide Medicaid benefits:  fee for service (where states reimburse health care providers for the services that they deliver to beneficiaries) and managed care (where states pay a fixed per capita fee to private health insurance plans or to provider groups, known as managed care organizations (MCOs), that provide services to enrollees).

 

Before anything else, we have to get a handle on fraud, waste, and abuse within the Centers for Medicare & Medicaid Services (CMS).  The U.S. Government Accountability Office (GAO) says that "CMS faces many challenges related to implementing payment methods that encourage efficient service delivery, managing the program to serve beneficiaries well, and safeguarding the program from loss due to fraud, waste, and abuse."   This will be facilitated through Operation Overhaul.

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