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. Third-Party Vendor Data and Contracts: Third-party vendor data requirements were generally met, but several MCPs misclassified non-claims costs and capitation payments, necessitating clearer guidance and verification procedures.

   Arizona Medicaid Managed Care Medical Loss Ratio Audit · Centers for Medicare and Medicaid Services · Jul 2026

2. Molina did not consistently submit dental value-added services encounters with the correct financial arrangement code. 13,654 of 23,303 encounters (59%) were coded as payable dental services (financial arrangement code 04) instead of value-added services (financial arrangement code 11), totaling $560,777.

   Dental Value-Added Services—Molina Healthcare · Texas Health and Human Services Office of Inspector General · Feb 20, 2026

3. The incorrect encounters may have been carried through to Superior’s Financial Statistical Reports (FSRs) and could affect capitation rates and potential experience rebates.

   Dental Value-Added Services—Superior HealthPlan, Inc. · Texas Health and Human Services Commission Office of Inspector General · Feb 20, 2026

1. Monitor receipt of State Directed Payments (SDP) and pass-through payments and reconcile with MCPs’ MLR reports.

   Ohio Medicaid Managed Care Medical Loss Ratio Audit · Centers for Medicare & Medicaid Services · Jul 25, 2025

2. MDHHS activate and develop edits to identify and reject improper and duplicate encounter claims to help ensure the accuracy of capitation rates and the amount that the State pays to MHPs.

   Follow-Up Report on Prior Audit Recommendations Oversight and Encounter Claim Integrity of the Comprehensive Health Care Program · Michigan Office of the Auditor General · Sep 9, 2022

3. Assess the appropriateness of requiring Medicaid MCOs to pay 95 percent of the nursing home room and board rate for dual-eligibles enrolled in hospice and, if warranted, take steps to implement any changes.

   Medicaid Program: Improper Medicaid Payments for Individuals Receiving Hospice Services Covered by Medicare · Office of the New York State Comptroller, Division of State Government Accountability · Dec 28, 2020

• Arizona Medicaid Managed Care Medical Loss Ratio Audit
• Dental Value-Added Services—Molina Healthcare
• Dental Value-Added Services—Superior HealthPlan, Inc.
• Illinois Medicaid Managed Care Capitation Payments for Incarcerated Enrollees
• Medicaid Agencies Made Millions in Unallowable Capitation Payments to Managed Care Organizations on Behalf of Deceased Enrollees
• How Kentucky Failed to Prevent Over $800 Million of Medicaid Waste
• Medicaid Program: Improper Premium Payments Made on Behalf of Managed Care Members Residing Outside the State
• Washington Medicaid Managed Care Medical Loss Ratio Audit
• Medicaid Payments to MCOs for Deceased Individuals
• Pennsylvania Capitation Payments for Enrollees With Multiple Medicaid Identification Numbers
• Ohio Medicaid Managed Care Medical Loss Ratio Audit
• Medicaid Managed Care Improper Payment Estimate
• Medicaid Program: Claims Processing Activity April 1, 2024 Through September 30, 2024
• School-Based Fee-for-Service Medicaid Reimbursements
• 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
• Without Federal Action, States Will Continue to Pay Millions of Dollars in Duplicate Medicaid Payments
• Performance Audit Report: Pharmacy Benefit Manager Services for the Physical HealthChoices Medicaid Program in Pennsylvania
• California Payments for Enrollees With Concurrent Medicaid Enrollment in Another State
• Medicaid Dental Benefit Program Manager - DentaQuest Informational Brief
• California Improperly Claimed $52.7 Million in Federal Medicaid Reimbursement for Capitation Payments Made on Behalf of Noncitizens With Unsatisfactory Immigration Status
• Oversight Of Medicaid Quality Care
• Medicaid Capitation Paid for Members Residing in Other States
• The Cost of Concurrent Enrollment
• Medicaid Audit Unit—Annual Report
• Medicaid Program: Claims Processing Activity October 1, 2023 Through March 31, 2024
• Medicaid Program: Improper Payments for Drugs Without a Federal Drug Rebate Agreement
• Maryland Department of Health Medical Care Programs Administration Managed Care Program Audit Report
• 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
• Office of Medicaid (MassHealth) — Review of Capitation Payments
• Public Assistance Reporting Information System Alerts
• An Audit Report on the Health and Human Services Commission's Medicaid Managed Care Rate-Setting Process
• Nearly All States Made Capitation Payments for Beneficiaries Who Were Concurrently Enrolled in a Medicaid Managed Care Program in Two States
• Follow-Up Report on Prior Audit Recommendations Oversight and Encounter Claim Integrity of the Comprehensive Health Care Program
• Improper Capitation Payments
• An Audit Report on Blue Cross Blue Shield of Texas, a Managed Care Organization
• Medicaid Program: Improper Medicaid Payments for Individuals Receiving Hospice Services Covered by Medicare
• Medicaid Managed Care Program
• Administration of Medicaid Payments to Nursing Facilities for Long-Term Care
• Oversight and Encounter Claim Integrity of the Comprehensive Health Care Program
• Medicaid Managed Care Improvements Needed to Better Oversee Payment Risks
• Performance Audit of Medicaid Managed Care Organizations for Fiscal Year 2016