A new report indicates the Governmental Accounting Office says Medicaid could face a financial risk, if inappropriate claims rise due to the use of consultants whose fees are contingent upon the amount of federal reimbursements they generate.

Last year, about 34 states used contingency-fee consultants to increase federal Medicaid reimbursements. That's up from 10 states in 2002. The GAO study illustrates an "urgent need for the Centers for Medicare and Medicaid Services to address certain issues in it oversight of states contingency fee consultant projects and in its overall financial management."

The consultants help develop new claims under limits for supplemental payments to providers such as nursing homes. Claims for targeted case management services, which provide benefits to defined groups based on shared characteristics such as location or special health needs, are a particular problem area.