Medicaid Contractors Struggle to Identify Overpayments

Last month, the Office of Inspector General issued a report that presents an early assessment of the efforts of Audit Medicaid Integrity Contractors to identify overpayments in Medicaid. Contained within the report are drastic figures that convey the fact that Audit MICs are having a difficult time identifying overpayments in their audits.

Only 11% of the study-assigned audits were completed, with findings of $6.9 million in overpayments, $6.2 million of which resulted from seven completed collaborative audits involving Audit MICs, Review MICs, states, and CMS, according to the report.

This leaves 81% of audits in which the MICs were unable or unlikely to identify any underpayments or overpayments. The OIG suggests that problems with the data used and analysis conducted to identify audit targets led to this performance.

Another possible reason for the low volume of overpayments found is the lack of an overarching governing body over the Medicaid auditing landscape, suggests William Malm, ND, RN, CMAS, senior data projects manager in the Atlanta office of Craneware, Inc.

"States are having difficulty auditing on the Medicaid side due to the diversity and complexity of the regulations, and the lack of billing specifics in the individual state guidelines," he says. "These business practices have not been well documented and there is no defensible source authority to proclaim that something is an overpayment or an underpayment."

One thing for providers to take note of with this report is the fact that, much like the Audit MICs in this report, Medicaid RACs are also being rolled out with different state guidelines and a lack of a standardized set of rules. According to Elizabeth Lamkin, CEO, Pace Healthcare Consulting, LLC, in Hilton Head, SC., this may provide an early look at what to expect with the Medicaid RACs.

Malm agrees, saying that this report helps to essentially verify that everything that CMS suggested might be a concern in the Medicaid RAC proposed and final rules, is starting to happen now.

"Already before the Medicaid RACs have even started, there is evidence of some of these concerns showing up now," he says. "These concerns include overpayments being slow or nonexistent and leaving it up to the states to determine individual rules."

Now, what exactly does this mean for providers? One immediate need and point of action, when it comes to Medicaid RACs, should involve the training or hiring of an educated care manager, according to Lamkin.

"The government will likely get better and better at auditing—and you can see how aggressive they have been as of late—so hospitals are going to need to get better at front-end documentation," she says. "Providers may also want to have a care manager that is qualifying beneficiaries and documenting admission approvals on the front end that is well-versed in both the state and federal guidelines. I think that’s the only way providers will really be able to attack all of this."

Also, and as is usually the case, providers should be proactive in their approach, as opposed to being reactionary when the auditor comes knocking.

"Medicare RACs (Recovery Auditors) have already proven to be distressing and difficult to manage for most hospitals, so this will add a layer of uncertainty to which they have yet to know, says Malm. "Providers need to really look at this and come up with a strong action plan."

To view the OIG report, click here.