Why GAO did this study: Medicaid-the federal-state health care financing program covering nearly 54 million low-income people at a cost of $276 billion in fiscal year 2003-is by its size and structure at risk of waste and exploitation. Because of challenges inherent in overseeing the program, administered federally by the Centers for Medicare & Medicaid Services (CMS), GAO in 2003 added Medicaid to its list of high-risk federal programs. To help administer the program, states may employ consultants in a number of roles, sometimes under contracts whereby payment is contingent upon the consultant's performance. GAO was asked to report on states' use of contingency-fee consultants. GAO examined the extent to which (1) states are using contingency-fee consultants for projects to maximize federal Medicaid reimbursements, (2) claims from contingency-fee projects in selected states are consistent with federal law and policy, and (3) states and CMS are overseeing claims from such projects. What GAO recommends: GAO recommends that CMS improve oversight of contingency-fee projects and states' reimbursement-maximizing methods. In comments, CMS said its initiatives substantially respond to the recommendations, and the states said that their projects comply with law. GAO maintains that additional actions are needed.