OIG findings raise questions about PE’s role in Medicaid

New OIG findings raise questions about private equity’s growing role in Medicaid

PESP points to recent reports on private equity-backed Medicaid contractors and autism therapy providers as examples of areas deserving greater scrutiny

WASHINGTON, DC — Following a new U.S. Department of Health and Human Services Office of Inspector General (OIG) report identifying weaknesses in federal oversight of state Medicaid expenditures, the Private Equity Stakeholder Project (PESP) is calling for greater scrutiny of private equity-owned companies that administer Medicaid programs and receive Medicaid funding.

The OIG report found that the Centers for Medicare & Medicaid Services (CMS) did not consistently follow oversight procedures and that some questions about Medicaid expenditures remained unresolved for years. The findings come as federal officials have placed renewed emphasis on rooting out waste, fraud, and abuse in Medicaid.

PESP argues that any serious effort to protect Medicaid dollars should also examine the growing role of private equity throughout the Medicaid system.

“Private equity firms have increasingly positioned themselves between Medicaid programs and the patients they serve,” said Jim Baker, executive director of PESP. “If policymakers want to identify waste, abuse, and inefficiency in Medicaid, they should take a closer look at the private contractors and providers owned by private equity that now play major roles in administering and delivering care.”

In May, PESP released a report examining private equity-backed Medicaid contractors that process claims, manage eligibility systems, oversee prior authorization, administer payments, and perform other critical functions for state Medicaid programs. The report documented audits, investigations, lawsuits, payment errors, missed recoveries, delays, and system failures involving contractors operating across multiple states.

Among the findings:

• A New York audit found that a contractor failed to recover $52.2 million in third-party payments
• An Oregon audit identified a 28% payment error rate and an estimated $11 million in improper payments
• Michigan identified more than $39 million in Medicaid overpayments tied to system gaps over a two-year period

Earlier this year, PESP also released a report examining private equity ownership of autism therapy providers that receive substantial Medicaid funding. The report highlighted federal and state audits finding tens of millions of dollars in improper Medicaid payments for applied behavior analysis (ABA) services, alongside growing consolidation of the autism therapy industry by private equity firms.

“Private equity is no longer confined to just hospitals and nursing homes,” Baker said. “Today, private equity-owned companies help determine Medicaid eligibility, process Medicaid claims, review treatment requests, manage payment systems, and increasingly deliver Medicaid-funded services themselves. That growing influence deserves far more attention from regulators and policymakers.”

Previous PESP research has highlighted private equity’s role in Medicaid and Medicare fraud, private equity firms extracting large payouts from healthcare providers, and/or private equity driven bankruptcies at other healthcare providers that draw on Medicaid funding. PESP’s research has also looked into private equity’s involvement in hospitals, nursing homes, urgent care, private duty nursing, intellectual and developmental disability (IDD) service providers, behavioral health providers.

As states prepare to implement expanded eligibility reviews, work requirements, and other administrative changes to Medicaid, PESP recommends oversight efforts should extend beyond beneficiaries and state agencies to include the private companies profiting from Medicaid administration and service delivery.

PESP’s reports are available here:

• Private Equity Middlemen in Medicaid:
  • https://pestakeholder.org/wp-content/uploads/2026/05/PESP_Report_Middlemen-in-Medicaid_2026.pdf
• Private Equity’s Autism Therapy Boom is Straining Medicaid:
  • https://pestakeholder.org/wp-content/uploads/2026/04/PESP_Report_PE-in-ABA_2026.pdf