Louisiana Made Unallowable Managed Care Capitation Payments on Behalf of Incarcerated Medicaid Enrollees OAS-25-04-100

The HHS OIG issued audit report OAS-25-04-100 on October 27, 2026, finding that Louisiana's Medicaid agency made unallowable managed care capitation payments on behalf of incarcerated Medicaid enrollees. Federal Medicaid rules prohibit capitation payments to managed care organizations for enrollees who are incarcerated, because inmates are generally ineligible for Medicaid-covered services during periods of incarceration. OIG reviewed capitation payments made on behalf of a stratified random sample of 100 incarcerated enrollees. Of those 100, the State agency made unallowable payments on behalf of 46 enrollees, totaling $143,459, of which $102,822 represented the Federal share. Extrapolating from the sample, OIG estimated that Louisiana made unallowable capitation payments totaling at least $3.7 million ($2.6 million Federal share) across the full audit period. OIG issued two recommendations. First, Louisiana must refund $2,690,745 (Federal share) for unallowable capitation payments made on behalf of incarcerated enrollees. Second, Louisiana must implement processes that consistently and promptly suspend Medicaid managed care enrollments upon receiving incarceration notifications. Louisiana agreed with both recommendations and described corrective actions already taken.