Medicaid administrative claiming is the payment of Federal Financial Participation (FFP), at different matching rates, for amounts "found necessary by the Secretary for the proper and efficient administration of the state plan". The Secretary is the final arbiter of which activities fall under this definition.

Claims held under this authority must be directly related to Medicaid program administration. In addition, payment may only be made for the percentage of time actually spent on Medicaid-eligible individuals.

Approved Cost Allocation Plans for Administrative Costs

CMS has approved cost allocation plans from states that include the following types of administrative costs necessary for proper administration of the state plan:

• Medicaid eligibility determinations
• Medicaid outreach
• Prior authorization for Medicaid services
• Medicaid Management Information System development and operation
• Early and Periodic Screening, Diagnostic and Treatment administration
• Third Party Liability activities
• Utilization review