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The Medicare RAC program continues to be the most prominent government audit program affecting the healthcare provider community.

As if the many changes in this program were not enough to handle, we await (with resignation) the commencement of the Medicaid RAC program, which will inflict similar treatment on Medicaid claims.

In the interim, the results of the Medicaid Integrity Program, which has been functioning in some fashion since the beginning of Fiscal Year 2009, have come under scrutiny by the OIG. If three recent reports (including the latest from April 23) are any indication, the program requires significant adjustment with regard to the audit workflow before meaningful results can be achieved.

I covered two of the recent OIG reports on the Medicaid Integrity Program on a recent episode of the Monitor Monday podcast, but I’ll give you a quick synopsis. The first was released back in February and addressed how well the review Medicaid Integrity Contractors (MICs) were performing their tasks. The report found that the review MICs completed 81 percent of their assignments, but had limited input into what specific leads were forwarded to the audit MICs. The review MICs created 114 reports identifying 113,378 unique providers for possible audit. CMS then filtered this extensive information and targeted 244 providers for audit. The report recommended that the quality of data given to the review MICs improve, as well as suggesting that the review MICs have more input in the final selection of audit leads.

This first report led into another, released roughly one month later, regarding audit MIC performance. The report showed that 81 percent of review audits conducted between January 1 and June 30, 2010, did not lead to the identification of an overpayment. Additionally, only 11 percent of assigned audits were completed and $6.9 million in overpayments were identified, with $6.2 million of that coming from collaborative audits between the review MICs, audit MICs, state fraud control units, and CMS. The report recommended that further collaborative audits be initiated.

On April 23, the OIG issued a five-page addendum to the February report on the Review MICs to further clarify the status of the 244 providers targeted for audit by CMS. It turns out that in the second half of 2011, CMS assigned 161 of the 244 providers targeted to the audit MICs. As of February 1, 2012, 127 of these proposed audits have been completed. From this universe of targets, only 25 audits uncovered overpayments with an identified total of $285,629. This number represents less than 1 percent of the estimated $33.5 million in potential overpayments identified by the review MICs at the time of referral of these cases from CMS to the audit MICs.

As with a report with similar findings from November 2011 regarding the ZPIC program, we see clear and compelling evidence that a CMS audit initiative is plagued by poor data and substandard execution. It is also worth remembering that some portion of the minuscule amount identified as overpaid will be appealed by providers successfully, which will further decrease the meager total amount of overpayment collections under the Medicaid Integrity Program.

A recent corporate news release telegraphs some subtle changes to Medicaid audit efforts. It was announced on April 23 that Thomson Reuters had reached agreement on a sale of their healthcare division to Veritas Capital for $1.25 billion in cash. In addition to being the Review MIC for most of the Northeastern United States, Thomson Reuters had been previously identified as the incoming Medicaid RAC contractor for the state of Indiana. This is an interesting purchase for Veritas, a company that has made a rather salutary living in the world of government contracting (mostly in areas of defense) since 1992.

Thanks to a recent letter from a House Ways and Means subcommittee requesting comprehensive, detailed information on CMS’ program activities, we should be learning quite a bit about the effectiveness of CMS’ overall strategy. As any RAC response team in a facility can tell you, crafting multiple reports showing less-than-stellar results across multiple contractors is an exercise in stating the obvious.

About the Author

J. Paul Spencer is the Compliance Officer for Fi-Med Management, Inc., a national physician practice financial management company based in Wauwatosa, WI. Paul has over 20 years of experience across all facets of healthcare billing, including six years spent with insurance carriers. In his current role with Fi-Med, he acts as a physician educator on issues related to E/M level of service and documentation audits by CMS and other outside entities. Paul has carried the CPC and CPC-H credentials from the American Academy of Professional Coders since 1998.

Contact the Author


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


J. Paul Spencer, CPC, COC

J. Paul Spencer is a senior healthcare consultant for DoctorsManagement. Is the national correspondent for Monitor Mondays, the live Internet radio broadcast produced by RACmonitor.

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