Maryland's Medicaid Program Rated Unsatisfactory - Again

State of MD - Maryland taxpayers are funding a Medicaid program riddled with problems, and state auditors say the agency responsible for overseeing it has repeatedly failed to fix them.

A new audit report released in May 2026 by the Maryland Office of Legislative Audits found 12 separate problems with the Maryland Department of Health's Medical Care Programs Administration, known as MCPA. The agency oversees Maryland's Medicaid program, which spent $16.7 billion in fiscal year 2025 providing health care to about 1.5 million residents.

The findings range from payments made on behalf of people who were dead or in jail to hundreds of millions of dollars that could not be properly accounted for.

The agency received an "unsatisfactory" rating, the same grade it received in the previous audit in 2023. Auditors stated that the two main reasons for the rating were "the significance of our audit findings and the number of repeat findings."

That word "repeat" shows up throughout the report, and it matters. These are not new problems. Many of the same issues were flagged in 2023, and some date back to 2019. The agency has promised to fix things, but the problems keep showing up.

Payments for People Who Were Dead or Behind Bars

One of the more striking findings involves $9.2 million in Medicaid payments made on behalf of people who were either incarcerated or deceased at the time services were billed.

Auditors found $6.4 million paid for services to 2,397 people who were in jail or prison when the claims were submitted. Under federal and state rules, Medicaid only covers certain services, like inpatient hospital care, while a person is incarcerated.

The agency conducts weekly matches of Medicaid records against incarceration data, but that process missed 908 of the 2,397 people identified in the audit. And for another 1,489 people the agency did identify, no action was taken to stop payments.

On the deceased side, auditors found more than 18,000 claims totaling $2.8 million for services billed after a recipient's recorded date of death. When auditors picked 35 of those cases for review, 30 of them turned out to be legitimate improper payments. As of late 2025, only $178,000 of those payments had been recovered.

Both of these problems were flagged in the prior audit. The agency had promised to fix them.

Ineligible Recipients Still Getting Benefits

The audit also found that MCPA was paying for health care benefits on behalf of people who may not have been eligible at all.

Auditors looked at four quarterly eligibility reviews MCPA conducted in 2023 and 2024. Out of 993 issues the agency identified itself, 306 were still unresolved as of May 2025. As a result, MCPA paid roughly $2.3 million in 2024 for 152 recipients who either lacked required income or citizenship documentation or were otherwise ineligible based on the records.

Separately, Maryland has rules requiring Medicaid recipients who are 65 or older to apply for Medicare. Medicare is federally funded, while Medicaid costs the state money. Getting people properly enrolled in Medicare saves the state significant dollars.

Auditors found that MCPA paid $145 million in 2024 for nearly 4,900 recipients who were not enrolled in Medicare despite appearing to be eligible based on age.

$338 Million in Nursing Home Payments With No Verification

Perhaps the most alarming dollar figure in the report involves nursing home stays that were never properly reviewed.

State rules require the contractor responsible for overseeing nursing facility care to conduct regular reviews to confirm that residents actually need the level of care being provided and billed to Medicaid. These are called continued stay reviews.

Auditors found that 4,425 residents, about 30 percent of the 14,609 people living in Medicaid-funded nursing facilities during 2024, never received a required review. That means $338.3 million in payments for that year went out without any verification that the care was necessary.

The state's contract with the oversight contractor included a provision allowing MCPA to charge $75 for each review that was not completed. That would have added up to roughly $332,000 in penalties.

MCPA did not collect any of it because the agency was not tracking whether reviews were being done at all.

This problem was also flagged in the two previous audits going back to 2019.

$200 Million That Was Not Recorded Properly

Auditors also found that MCPA had no process in place to compare what was recorded in the Medicaid billing system against what showed up in the state's accounting records. When auditors raised the issue in March 2025, MCPA ran the comparison for the first time.

The result was a gap of $200.9 million across fiscal years 2023 and 2024 that had gone undetected. Medicaid expenditures are required to be recorded in the billing system so the state can recover federal reimbursement. If expenses are not properly recorded, the state may be leaving federal money on the table.

MCPA told auditors it did not consider the gap significant enough to look into further.

Home Care Recipients Left Without Services

The audit also confirmed an allegation submitted to the state's fraud, waste, and abuse hotline. The tip claimed that people approved for home and community-based services were waiting far too long for their care plans to be approved, leaving them without help they needed.

Auditors found it was true. As of June 2025, 842 initial service plans had been waiting for approval for more than 15 days. Among those, 234 had been sitting unapproved for anywhere from three months to two and a half years. More than 2,400 annual plan updates were also delayed.

The real-world impact was serious. Five people did not receive services like home modifications and transportation to medical appointments because their plans were stuck in limbo. At the same time, MCPA paid $430,000 for services that plans flagged as no longer medically necessary, because no one had approved the updated plans stopping those services.

One case stood out. A plan submitted in July 2022 called for reducing a recipient's personal assistance hours. That plan did not get approved until October 2025. During those three-plus years, MCPA paid $54,000 for services the person no longer needed.

What Happens Next

The Maryland Department of Health responded to the audit and said it has already resolved five of the 12 findings and partially resolved one more. The department pushed back on the "unsatisfactory" label, saying the report does not give enough credit for progress already made.

State auditors disagreed. They reviewed MCPA's response and in several instances found statements that conflicted with the audit findings. In each case, auditors said they reviewed their work and stood behind their conclusions.

The audit covers the period from April 2022 through March 2025. Any fixes made after that period will be evaluated in the next audit.

For Maryland residents who rely on Medicaid, or who pay state taxes that help fund it, the report is a reminder that the system meant to protect the most vulnerable is not being managed as carefully as it should be.

The full audit report is publicly available through the Maryland Office of Legislative Audits at ola.maryland.gov.

Anyone who wants to report fraud, waste, or abuse involving Maryland state programs can call the fraud hotline at 1-877-FRAUD-11.