OIG Raises Concerns About States’ Outsourcing of Medicaid IT Work

April 15, 2014 in News

Eleven states outsource internationally some of their IT-related Medicaid administrative work, including nine states that lack laws to limit how private health information is shared overseas, according to a report from the HHS Office of Inspector General, the Washington Times reports.


According to the Times, the federal government is required to provide written approval before Medicare can offshore any work. However, Medicaid does not have the same restrictions, and it is not illegal for the program to use foreign contractors for some Medicaid work, according to OIG.

OIG noted that CMS has issued guidance in compliance with the Affordable Care Act that authorizes Medicaid “to provide payments to contractors operating offshore for tasks — including administrative functions — that support the administration of the Medicaid program.”

Report Findings

The OIG report found that four states have taken steps to ban the outsourcing of Medicaid work, while two states — Missouri and New Jersey — allow offshoring in restricted circumstances. Meanwhile, the report identified nine states that do not have any laws regarding how to handle personal health data when Medicaid tasks are outsourced, including:

  • Florida;
  • Massachusetts;
  • Mississippi;
  • Montana;
  • New Mexico;
  • North Dakota;
  • Pennsylvania;
  • Rhode Island; and
  • Tennessee.

The report found that those states without codified protections included written protections in contracts with offshore entities to ensure that personal health information was not shared.

Privacy Concerns

OIG did not report any privacy breaches as a result of the use of foreign contractors, but the report raised some concerns about privacy and security.

Specifically, the report questioned who would be responsible for ensuring that personal information is not shared in cases where a domestic contractor hires an offshore subcontractor.

According to the Times, states did not respond to requests for comment or requested more time to develop a response. The White House Office of Management and Budget also did not respond to a request for comment (Dinan, Washington Times, 4/14).

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