Michigan Spent $82M on Medicaid Contract With Little Oversight, Audit Finds

Oversight failures raise questions about accountability and protection of public funds

LANSING, Mich. — A new state audit is raising serious concerns about potential waste and lack of accountability inside Michigan’s Medicaid system, finding that tens of millions of taxpayer dollars were spent with little documented oversight.

The Michigan Office of the Auditor General found the Michigan Department of Health and Human Services did not adequately monitor an $82 million contract with a private pharmacy benefits manager over a roughly seven-and-a-half-year period.

The contract, awarded to Prime Therapeutics State Government Solutions, was responsible for processing pharmacy claims and administering drug rebates for Medicaid.

Despite the size and importance of the contract, auditors concluded the department’s oversight efforts were “not sufficient.”

At the center of the findings is a breakdown in basic accountability.

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Auditors found the state largely relied on the contractor’s own self-reported performance data and did not independently verify whether the work met required service levels.

In some cases, there was little to no documentation showing the state reviewed performance at all.

The audit also found the department’s monitoring plan lacked detail, had not been updated for years despite contract changes, and failed to outline how oversight was actually supposed to be carried out.

Even more concerning, auditors said the department did not consistently document its oversight activities and did not maintain evidence proving monitoring was performed, a key requirement under state procurement rules.

That lack of documentation makes it difficult to determine whether taxpayer dollars were being properly protected.

The contract itself was classified as high-risk, meaning stronger oversight was expected.

Instead, auditors found the department did not use available tools to independently check the contractor’s work and, in some cases, relied on assumptions rather than verification.

The report also noted that while the department had the authority to enforce penalties or take corrective action when performance issues arose, it did not consistently do so.

Without proper monitoring, auditors warned the state may remain unaware of performance failures or financial risks tied to the contract.

State Rep. Jamie Thompson sharply criticized the findings, pointing to what she described as a breakdown in government responsibility.

“This is exactly the kind of failure that erodes public trust,” Thompson said. “When millions of taxpayer dollars are being spent, there should be real oversight, real verification, and real accountability. Instead, what we see here is a system where no one was truly checking the work.”

“Michigan families deserve accountability, transparency, and leadership that actually does its job,” she added.

The Department of Health and Human Services disagreed with some of the audit’s findings but acknowledged the need to improve its monitoring practices.

Auditors issued multiple recommendations, including requiring the department to strengthen its oversight plan, implement clear monitoring procedures, and ensure proper documentation of all review activities.

The findings highlight broader concerns about how large government contracts are managed and whether safeguards are in place to prevent waste, mismanagement, or potential abuse of public funds.

For taxpayers, the audit raises a fundamental question: how closely is the state watching where the money goes?

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