OIG to CMS: Improve Oversight of States Medicaid Expenditures

The Department of Health and Human Services Office of Inspector General (OIG) posted a report on June 8, 2026, titled, CMS Should Improve Its Policies and Procedures for the Oversight of States' Reported Medicaid Expenditures to Better Protect the Financial Integrity of the Medicaid Program. The OIG said it conducted this audit because the Centers for Medicare and Medicaid Services (CMS) may not be consistent in following their own policies and procedures when reviewing of state expenditures. This review is in support of the administration's program integrity focus.

The report finds that CMS didn't follow their internal timelines in regulation, deferrals remained unresolved for extended periods of time, and tracking of disallowances was inadequate. From these findings, CMS concurred with all four of OIG's recommendations to increase staff training to analysts conducting document review, revise policies to align with regulation on deferral resolution, change policies to specify responsibilities for tracking and resolving disallowances, and amend CMS' internal document to help analysts determine disallowed payment status. Even if CMS were to expeditiously implement these changes, the effect on providers will be low. As more states, beyond California and Minnesota receive deferrals, more consistent administration from CMS will help states better understand the process and their recourse. A summary and the full report are available here.