Achieved Savings Rebate Program-Offset of Rebates on CMS-64

The Social Security Act (the Act) Section 1115 gives CMS authority to approve experimental, pilot or demonstration projects that it considers likely to assist in promoting the objectives of the Medicaid program. States may then use CMS-approved waivers to have Managed Care Organizations (MCOs) provide care to Medicaid beneficiaries. Under these arrangements, States make capitation payments to the MCOs in return for the MCOs providing the patient care for the Medicaid beneficiaries. Some States place limitations on MCOs' earnings, for example, limiting the profits they may earn or requiring a certain percentage of their revenues to be spent on medical expenses. States with such limitations may require the MCOs to return a portion of the capitation payments when the MCOs exceed those limitations. According to the Act, § 1903(d)(3)(A) States are required to refund to the Federal Government the Federal share of any amounts recovered during any fiscal quarter. Additionally, 45 CFR § 75.406(a) requires recipients of Federal awards (which includes State Medicaid agencies) to credit to the Federal award the Federal share of reduction-of-expenditure type transactions, such as rebates, purchase discounts, or allowances when those transactions relate to allowable costs. For selected States, we will determine whether the States properly offset against CMS-64 expenditures refunds of capitation payments received from MCOs.

Announced or Revised	Agency	Title	Component	Report Number(s)	Expected Issue Date (FY)
Completed (partial)	Centers for Medicare and Medicaid Services	Achieved Savings Rebate Program-Offset of Rebates on CMS-64	Office of Audit Services	W-00-22-31562; A-04-22-04089	2024