Capitation Payments

Capitation payments are recurring amounts paid to managed care plans for each enrolled beneficiary. Audits examine rate inputs, enrollment records, duplicate or incorrect payments, reconciliations, and the recovery of amounts that should not have been paid.

Because capitation is generally paid before individual services are delivered, errors can continue each month until enrollment or rate records are corrected. Even a narrow control weakness can therefore create repeated payments across a large beneficiary population.

1. In a sample of 100 enrollee-matches, 2 enrollee-matches were paid correctly, while 98 enrollee-matches resulted in unallowable capitation payments totaling $1,068,308 ($559,087 Federal share).

   Pennsylvania Capitation Payments for Enrollees With Multiple Medicaid Identification Numbers · Office of Inspector General, Department of Health and Human Services · Jul 2025

2. The improper payment estimate is based on reviews of a sample of payments, focusing on whether payments were made correctly based on documentation and contract terms.

   Medicaid Managed Care Improper Payment Estimate · U.S. Government Accountability Office · Jun 26, 2025

3. Incorrect Maternity and Newborn Birth Claims Involving Managed Care (including Supplemental Low Birth Weight Newborn Capitation Payments and Supplemental Maternity Capitation Payments): 22 claims with erroneous birth information or diagnosis codes resulted in overpayments totaling $1,341,969, all adjusted by fieldwork end; Supplemental Low Birth Weight Newborn Capitation payments totaled $1,198,800 for 10 claims (overpayments corrected); Supplemental Maternity Capitation Payments totaled $143,169 across 12 claims (overpayments corrected).

   Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024 · Office of the New York State Comptroller, Division of State Government Accountability · Jun 18, 2025

1. CMS should conduct a cost-effectiveness study to determine whether to include payments to managed care plans in recovery audits.

   Medicaid Managed Care Improper Payment Estimate · U.S. Government Accountability Office · Jun 26, 2025

2. Review the $8.3 million in overpayments, disenroll the members from managed care plans, and make recoveries, as appropriate.

   Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024 · Office of the New York State Comptroller, Division of State Government Accountability · Jun 18, 2025

3. Findings 1 DHS: Work with its actuary team to ensure that the transmission fees were adequately accounted for in the encounter data, MLR calculations, and capitation rates.

   Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania · Pennsylvania Department of the Auditor General · Aug 21, 2024

• Pennsylvania Capitation Payments for Enrollees With Multiple Medicaid Identification Numbers
• Medicaid Managed Care Improper Payment Estimate
• Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024
• Colorado Made Capitation Payments to Managed Care Organizations After Enrollees’ Deaths
• Performance Audit of the Health Benefits for Immigrant Seniors and Adults
• Office of Medicaid—Review of Capitation Payments With Multiple Identification Numbers
• Examining Washington’s Concurrent Medicaid Enrollments
• Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania
• Medicaid Dental Benefit Program Manager - DentaQuest Informational Brief
• Oversight Of Medicaid Quality Care
• The Cost of Concurrent Enrollment
• Medicaid Audit Unit—Annual Report
• Medicaid Program: Claims Processing Activity October 1, 2023 Through March 31, 2024
• Multiple States Made Medicaid Capitation Payments to Managed Care Organizations After Enrollees’ Deaths
• An Actuarial Analysis Of The Health And Human Services Commission’s Fiscal Year 2024 Medicaid Managed Care Rates Actuarial Soundness
• Medicaid Residency
• Nearly All States Made Capitation Payments for Beneficiaries Who Were Concurrently Enrolled in a Medicaid Managed Care Program in Two States
• An Audit Report on Blue Cross Blue Shield of Texas, a Managed Care Organization
• Medicaid Managed Care Improvements Needed to Better Oversee Payment Risks
• Performance Audit of Medicaid Managed Care Organizations for Fiscal Year 2016