Assessment of Audit Contractors Reveals Failure to Identify Overpayments

This week the Office of Inspector General of the U.S. Department of Health and Human Services (DHHS) released a report entitled “Early Assessment of Audit of Medicaid Integrity Contractors,” which found that 81% of the Centers for Medicare & Medicaid Services’ (CMS) pre-screened audits undertaken to fight waste, fraud and abuse in Medicaid were either unable or unlikely to identify overpayments during a recent six-month period.
The analysis found only 11% of assigned audits conducted from January 1 – June 30, 2010 by Medicaid Integrity Contractors (MIC) were completed with $6.9 million in overpayments identified, $6.2 million of which resulted from seven completed collaborative audits involving Audit MICs, Review MICs, States, and CMS. The remaining audits had not progressed enough to draw conclusions about likely outcomes.

Failure to find overpayments was blamed on the use of audit algorithms previously found ineffective, errors in the data, and the contractors who selected the providers to receive audits based on their likelihood to receive overpayments. The CMS spent $17.2 million on all such contractors in fiscal 2010. The report recommended the CMS increase its coordination with each state’s Medicaid officials.

The NCMS provides assistance and education to medical practices on how to prevent such audits.  Visit the NCMS Health Care Audit Resource Center for more information. PractEssentials, a NCMS Foundation initiative, provides consulting services designed to help your practice identify potential problems areas, evaluate options, and implement solutions. On April 25, PractEssentials will conduct a one-hour webinar on recovery audits. For assistance from PractEssentials or for more information, contact Franklin Walker, Director of Programs, at (800) 722-1350 ext 141.


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  • R Thomas Barowsky

    81% of the audits were unable to find fraud, waste and abuse because there was something wrong with the audits and NOT because there was nothing ( or very little) to find. How typical of this administration to continue to vilify physicians for their failed witch hunts. Spending more than $17 mil to save $6.9 mil if the audits hold up or $6.2 mil if they don’t.

  • Dear Shawn,

    If I understand the above, $17 million was spent to recover under $7 million. It takes a lot of time and energy to provide care and additional time to maintain and upgrade one’s skills. It is a privilege and a joy to be able to practice medicine. Excessive regulations suck all the oxygen out of the room.

    I have been in New Zealand for five months. There are doctors here from around the world because they do not care for the systems of care at home in the U.K., Ireland, or the U.S.
    The lesson is, systems are needed, but run the risk of wearing down the providers and consumers of healthcare. It is not perfect here either. We have to care,engage and persist. Thanks for keeping me in the loop.

    Eric S. Bindewald
    Southland Hospital
    Invercargill, New Zealand