GAO Issues Report on Medicaid Managed Care

WASHINGTON, May 6 -- The Government Accountability Office has issued a report on the compensation of Medicaid directors and managed care organization executives in states offering Medicaid managed care. The report (GAO-17-427R) is titled "Medicaid Managed Care: Compensation of Medicaid Directors and Managed Care Organization Executives in Selected States in 2015".

The report was sent to Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, and Rep. Frank Pallone, D-N.J., ranking member of the House Energy and Commerce Committee, on March 31. Here are excerpts of summaries associated with the report.

What GAO Found: "Medicaid directors earned less than most top paid managed care organization (MCO) executives in 2015 in the states GAO selected for its review. Under managed care arrangements, states contract with MCOs to provide certain services to beneficiaries. Spending for Medicaid managed care has grown significantly, representing over one-third of federal spending on Medicaid in 2014.

- In 2015, Medicaid directors' salaries in the 10 selected states ranged from $103,020 to $260,088, with an average of $152,439 and a median of $141,000.

- The 2015 salaries paid to 133 top paid MCO executives in seven states that met GAO's selection criteria and provided data ranged from $108,598 to $796,732, with an average of $236,007 and a median of $229,442.

Eight former Medicaid directors GAO interviewed said that they earned less as Medicaid directors, but had more complex and time consuming responsibilities than they did as MCO executives. The former Medicaid directors also said that it is not uncommon for Medicaid directors to take higher paying jobs in the private sector, which, according to one former Medicaid director, has resulted in a loss of institutional knowledge in states' Medicaid programs.

National studies suggest that Medicaid directors' compensation is not competitive with the compensation of individuals completing similar tasks in the private sector."

Why GAO Did This Study: "In fiscal year 2017, Medicaid is projected to finance the health care coverage for an estimated 74 million beneficiaries with estimated expenditures of $596 billion. State Medicaid directors have broad responsibilities for their programs, including benefit and payment determinations, procurement of services, and making payments to MCOs. In fiscal year 2017, Medicaid is projected to finance the health care coverage for an estimated 74 million beneficiaries with estimated expenditures of $596 billion. State Medicaid directors have broad responsibilities for their programs, including benefit and payment determinations, procurement of services, and making payments to MCOs.

MCO executives have a variety of responsibilities in delivering services to Medicaid beneficiaries, some of which are similar to those of Medicaid directors. GAO was asked to examine the compensation of Medicaid directors and MCO executives in states offering Medicaid managed care. This report examines what is known about the 2015 compensation of Medicaid directors and top paid MCO executives in selected states offering Medicaid managed care.

GAO reviewed compensation information in 10 selected states offering Medicaid managed care. GAO obtained information on the compensation of Medicaid directors in those states by reviewing the states' websites and contacting state Medicaid program officials. GAO analyzed selected MCOs' 2015 National Association of Insurance Commissioners (NAIC) financial reports obtained from 7 of the 10 selected states' offices of insurance--MCOs in 2 of the 10 states did not meet GAO's selection criteria and 1 state did not provide information on executives' compensation in selected MCOs. GAO interviewed eight former Medicaid directors who then became MCO executives about their compensation and experiences in both roles, and examined published studies on Medicaid directors' compensation and tenure in recent years."

The text of the GAO report is available at http://www.gao.gov/products/GAO-17-427R?utm_medium=email&utm_source=govdelivery

Myron Struck, editor, Targeted News Service, Springfield, Va., 703/304-1897; editor@targetednews.com; http://www.targetednews.com