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In addition to conducting data analysis, it is the job of review Medicaid integrity contractors (MICs) to provide or recommend audit leads as well as to detect and prevent Medicaid fraud. However, between January 2010 and July 2010, they only conducted data analysis and, at the request of the Centers for Medicare & Medicaid Services (CMS), issued lists of providers ranked by the amount of their corresponding potential overpayments.

Review MICs did not single out any individual providers on their lists as specific audit leads, and their identification of providers with potentially fraudulent billing patterns was “limited.”

The Department of Health & Human Services Office of Inspector General (OIG) summarized these findings and others in a recently issued report entitled Early Assessment of Review Medicaid Integrity Contractors (OEI-05-10-00200 issued February 2012). Although the OIG did not determine whether review MIC activities resulted in the recovery of actual overpayments, it achieved these objectives:

  • To determine the extent to which review MICs completed assignments, recommended audit leads, and identified potential fraud
  • To describe barriers that they encountered in their program integrity activities.

Even though the review MICs did not really do their jobs as expected, part of that reason lies with the directions given to them by the Centers for Medicare & Medicaid Services (CMS). For example, the MICs didn’t recommend specific audit leads because CMS instead directed them to submit lists of providers ranked by the amount of their potential overpayments. The MICs identified 113,378 unique providers, and, from this list, CMS itself selected 244 audit targets.

The OIG urged CMS to direct review MICs to include specific recommendations of potential audit targets in their data analysis reports for follow-up. In December 2010, CMS did begin to provide review MICs with more explicit directions, including specific recommendations for potential audit targets.

Biggest Barrier: Lack of Data

“Compromised data” (i.e., missing or inaccurate data) in CMS’s Medicaid statistical information system (MSIS) hindered the review MICs’ abilities to accurately perform their data analyses. In addition to files of eligible Medicaid enrollees, MSIS includes four Medicaid claims files: inpatient care, long-term care, prescription drugs, and all other claims.

Clearly, reported the OIG, CMS must take steps to improve the data quality being used-a recommendation with which CMS agreed, and in its November 2011 response, reported that it plans to expand the MSIS to include additional data elements important for detecting Medicaid fraud, waste, and abuse.

By 2014, CMS intends to replace MSIS with an expansion known as transformed MSIS (T-MSIS), which will include new data that should be updated more frequently than MSIS. This upgrade effort began in 2007 and a pilot project of T-MSIS began in 10 states during late summer 2011.

CMS also is working directly with states to obtain and include their Medicaid data. In fact, CMS already has initiated a project whereby a review MIC in Louisiana is accessing the state’s Medicaid data system instead of CMS’s system.

Stats on Overpayments

CMS makes monthly assignments to review MICs to identify potential overpayments. For each assignment, CMS specifies the state, type of Medicaid claims data, and range of service dates to be reviewed. CMS also specifies the targets for oversight, known as algorithms, that review MICs must use to perform assignments, which generally must be performed within 60 days.

During the six-month period under OIG review, the MICs completed that assignment and provided CMS with the results. The reports of algorithm findings contained 113,378 unique providers with $282 million in potential overpayments, which were generated by approximately 1 million claims for Medicaid-covered services.

Although the amount of potential overpayments for each provider varied, most potential overpayments were modest, the OIG found. Of providers included in the ranked lists, 89 percent owed less than $1,000 in potential overpayments, including 107 providers with no potential overpayments. However, at the high end, one provider did owe the Medicaid program more than $3.6 million in potential overpayments.

Billing Issues Reviewed

Appendix A of the OIG’s report provides a table that lists the review MICs assignments from CMS, including, among other items, the service type, billing issue reviewed, and amount of potential overpayments. The OIG’s table is not limited to the service types listed below, but the following provides an idea of a few areas of vulnerability within the hospital.  See Appendix A of the report for the entire table.


Service Type

Billing Issued Reviewed

Inpatient services

  • Duplicate billings
  • Inappropriate service setting
  • Services after death

Outpatient services

  • Duplicate billings
  • Inappropriate service setting
  • Medically unlikely
  • Services after death
  • Upcoming

Pharmacy services

  • Duplicate billings
  • Early refill
  • Inaccurate quantity
  • Overprescribed
  • Services after death


For More Information

For the OIG’s report discussed above, go to http://oig.hhs.gov/oei/reports/oei-05-10-00200.pdf.

About the Author

Janis Oppelt is an editor with Medical Learning, Inc. (MedLearn), a Panacea Healthcare Solutions Company, St. Paul, MN.

Contact the Author


To comment on this article please go to editor@racmonitor.com


Janis Oppelt

Janis Oppelt was the former editorial director for MedLearn Publishing.

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