Incomplete Monitoring and Reporting, Lax Security Controls Among Issues Identified in Latest Review of Ohio Department of Medicaid

COLUMBUS — State auditors have identified incomplete monitoring of funding, missing reports, untimely fund deposits, and inadequate security controls over computer and related systems at the Ohio Department of Medicaid (ODM).

The issues were outlined in a management letter related to an audit of ODM programming for the fiscal year that ended June 30, 2025. The letter is supplemental to the State Single Audit released earlier this year that identified additional issues related to ODM and other state agencies. The full report is available online at ohioauditor.gov/auditsearch/search.aspx.

“We continue to identify deficiencies in Medicaid spending, which represents the largest taxpayer-funded programming in the state budget,” Auditor of State Keith Faber said. “Inadequate controls continue to be an issue. More needs to be done to ensure public funds are being used to help the most vulnerable among us and not stolen or wasted.”

ODM administers about $40 billion annually in health care and related programming for about 2.9 million lower-income residents, older adults, individuals with disabilities, pregnant women, infants and children, and others. 

The Ohio Auditor of State’s Office regularly identifies issues in the Medicaid system and error rates that could lead to fraud, waste, or abuse of public resources. Most recently, the annual State Single Audit reported an error rate of 15.6% for payments made for services for residents who had died or were otherwise ineligible for Medicaid programming, meaning potential unallowable costs of up to $4.4 billion.

The management letter identified a number of other issues. For example, ODM did not complete the monitoring of claims for the $28.6 billion in Medicaid Cluster benefits and $916.7 million in Children’s Health Insurance Program (CHIP) benefits administered through fiscal intermediaries.

Absent consistent monitoring controls over the service organizations processing claims, there is an increased risk that payments will be inaccurate, incomplete, not made at all, or noncompliant with federal requirements.

Auditors added, “We recommend the department reevaluate and strengthen monitoring controls … (to) ensure claims are processed accurately, completely, and in a timely manner.”

Other issues noted in the management letter included:

• ODM did not perform the annual reconciliation of $857 million in funds used to reimburse health-care providers for covered services to verify franchise fee assessments were accurate and complete.

• ODM did not have procedures in place to meet reporting requirements related to the Pregnant Women, Children and Infants or Access Barriers Assessment reports and, as a result, failed to submit required reports to the Ohio Joint Medicaid Oversight Committee.

• ODM was late in depositing fees, taxes and other funds it received on multiple occasions. Auditors noted, “… (U)ntimely deposits increase the risk that funds could be lost, stolen, or misappropriated. The risk is also increased that management could be making decisions using financial information that is not current or entirely accurate.”

• ODM did not obtain and review reports from third-party administrators related to $3.82 billion in rebates from drug manufacturers to ensure compliance with program requirements.

• Multiple issues were noted related to access to ODM computer systems, programs and data, including inappropriate user access and a failure to revoke access to former employees. Auditors wrote, “Unauthorized or inappropriate access to production systems increases the risk of incorrect or inappropriate payment transaction processing or the alteration of data files, which could result in misuse or fraudulent misappropriation of state resources or federal program monies.”

In a written response, ODM acknowledged the management letter and outlined some of its efforts to address the specific issues that were identified.

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The Auditor of State’s Office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,900 state and local government agencies. Under the direction of Auditor Keith Faber, the office also provides financial services to local governments, investigates and prevents fraud in public agencies, and promotes transparency in government.

Public Affairs
Contact: Marc Kovac
press@ohioauditor.gov