Washington & West Resources

Written by Linda Fotheringill, Esq.

The Deficit Reduction Act of 2005 provided the resources to establish the Medicaid Integrity Program (MIP), the first national strategy in the 40-year history of the Medicaid program to promote the fiscal integrity of Medicaid by detecting and preventing provider fraud, waste and abuse.

This program has been a concern to most providers who already are under siege with RAC audits and other Medicare audit programs. I thought it would be a good idea to look at what has happened so far with the MIP program to get some sense of what providers can expect going forward.

So how is the MIP doing? According to the Secretary of Health & Human Services’ June 2009 Report to Congress on the MIP’s fiscal year 2008 performance, that time period “marked an impressive year of program accomplishments.” As taxpayers, we should hope so; appropriations for the MIP totaled $105 million by the end of 2008 and would continue at a clip of $75 million in FY 2009 and each year thereafter. Of course, as providers, we wonder how much more we can take of government audit programs.

Where Did the Money Go?

So what did that $105 million in appropriations produce? From what I can glean from government reports, the return on investment thus far remains elusive. Use of the funds has gone to “Staffing and Program Support/& Administration,” staff training, so-called “Support & Assistance to States,” development of a “Data strategy, Information Technology Infrastructure,” and most notably to Medicaid Integrity Contractors (MICs).

Unlike the RAC contractors, MICs are not paid on contingency. In FY 2008 the three types of MICs received $20,510,469 in taxpayer money and were charged to perform the following activities:

1. Review-of-Provider MICs were to:

• Analyze claims data to identify potential vulnerabilities;
• Provide leads/target audits to the Audit MICs; and
• Use data-driven approaches to focus efforts on aberrant billing practices.

(Review MICs include AdvanceMed, ACS Healthcare, Thomas Reuters, Safeguard Solutions (SGS) and IMS Government Solutions.)

2. Audit-of-Provider MICs were to:

• Conduct post-payment audits of Medicaid providers;
• Perform a combination of field audits & desk reviews; and
• Identify overpayments.

(Audit Provider MICs include Booz Allen Hamilton, Fox & Associates, IPRO, Health Management Solutions and Health Integrity LLC.)

3. Education MICs were to:

• Develop training materials and awareness campaigns; and
• Highlight value of education in preventing fraud and abuse.

The launch of the Medicaid Integrity Audit Program actually did not occur until April 2008, when Thomas Reuters began conducting data mining to help identify Medicaid providers with suspect billing patterns. Provider audits began in Florida and South Carolina at the end of FY 2008; audits in other jurisdictions began in FY 2009. Government reporting on the fiscal ROI effect of the audit activities is sparse. Secretary Kathleen Sebelius states only that, “at the end of FY 2008, preliminary findings from the test audits had identified approximately $8 million in overpayments.”

One would think that since the Medicaid Integrity Program was created by the Deficit Reduction Act with the stated purpose of promoting the fiscal integrity of the Medicaid program, our government would be expecting a clear-cut payoff from the $180 million in appropriations to date.

Accordingly, I continue to believe that MIC audit activity will get underway in earnest during the next few years and that providers soon will feel significant fiscal pain. A report on FY 2009 is due out in May or June of this year and may be more telling on what $180 million in appropriations can accomplish and what providers can expect.

About the Author

Linda Fotheringill, Esq., is a founding member of Washington West, LLC, and is a nationally recognized expert on denial and appeals management. Ms. Fotheringill successfully assists hospitals across the country, overturning “hopeless” denials and generating millions of dollars in otherwise lost revenue.

Contact the Author:

l.fotheringill@washingtonwest.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Written by Linda Fotheringill, Esq.

President Obama signed the Patient Protection and Affordable Care Act into law on March 23, 2010. Reaction has ranged from jubilation to threats of violence. Meanwhile, various public opinion polls conducted just prior to and after the enactment of this so called massive overhaul of the nation’s health care system reported most citizens opposing the legislation by a slight margin.

The Healthcare Provider community has probably not yet had the time to fully respond as many individuals have not had the time to read, much less digest, the 2,409 page document. As a further deterrent to tackling the Act, it is still subject to change. The Senate is debating significant modifications to the bill in the proposed Health Care and Education Affordability Reconciliation Act (HR 4872) (Reconciliation Bill). After the Senate passes a series of changes to the Reconciliation Bill, it will have to go back to the House of Representatives for a final vote. Also, the Act faces various legal challenges from a number of states. Nevertheless, many legal experts predict that the Act will ultimately be found constitutional and will survive more or less intact.

Whether one is a supporter or not, it is time to reconcile ourselves to the Patient Protection and Affordable Care Act as it will have substantial impact on health care providers, patients, employers and taxpayers as it is implemented over the next eight years.

Of particular concern to Healthcare providers is the expansion of the RAC program to Medicaid mandated by the Patient Protection and Affordable Care Act. By no later than December 31, 2010, States must establish a program to contract with one or more recovery audit contractors for the purpose of identifying underpayments & overpayments and recouping Medicaid overpayments. Payments will be made to contractors only on amounts recovered and will be on a contingent basis. The states may specify the contractor contingency fees for overpayments and underpayments.

The only bright side to RAC expansion to Medicaid is that each state must have an appeal process in place and each state must coordinate recovery efforts with “other contractors or entities performing audits” and federal and state law enforcement agencies.

The expansion of the RAC program to Medicaid is not unexpected given the GAO’s estimate of $18.6 billion per year in “improper payments” and the apparent lack of meaningful financial return from the MIC audits conducted through the Medicaid Integrity Program.[1] The MIC contactors are not paid on contingency. I anticipate that the RAC Medicaid contractors will be far more aggressive in their audit efforts given the fact they are paid on contingency.

Furthermore, the Act mandates expansion of the RAC program to Medicare Parts C and D. Recovery audit contractors are required to be under contract to ensure that every Medicare Advantage plan under part C, and every prescription drug plan under part D, has an anti-fraud plan in effect. The anti-fraud plans must be reviewed along with the prescription drug plan’s estimates of enrollment of high-cost beneficiaries compared to actual numbers of such beneficiaries.

 

Healthcare Providers truly need to tighten their belts as the cost savings and deficit reductions anticipated by the Act will, in my opinion, come in large part from Providers though reduced reimbursement and take backs. As we know, the GAO has reported our nation’s long-term fiscal outlook as “unsustainable”, and the GAO has pointed to alleged “improper payments” in the Medicare and Medicaid programs as a major culprit.[2]

However, many of the so-called “improper payments” are not improper at all. Rather, many denials involve allegations of lack of medical necessity made hastily by after-the-fact reviewers (often without proper qualifications) with the benefit of the 20/20 hindsight of Monday morning quarterbacks. The high overturn rate in the Medicare appeals process is a testament to the inappropriateness of many of these denials. Sadly, I believe these new fiscal pressures will ultimately result in a reduction of the quality of available healthcare despite the promises of those who somehow think we can get more by spending less. Meanwhile, Healthcare providers are advised to make sure they are doing everything possible to prepare for an onslaught of audits and pre and post payment denials.

 

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[1] Appropriations for the Medicaid Integrity Program totaled $105 million by the end of 2008 and will continue at a clip of $75 million in FY 2009 and each year thereafter. Yet government reporting on the fiscal ROI effect of MIC audit activities is sparse. According to the Secretary of Health & Human Services’ June 2009 Report to Congress on the MIP for Fiscal Year 2008, Secretary Sebelius states only that “at the end of FY 2008, preliminary findings from the test audits had identified approximately $8 million in overpayments.”

[2] On April 22, 2009 the GAO released a report showing substantially increasing “Improper Payments”, and noted that Medicare and Medicaid comprise 50% of the reported government wide improper payments in fiscal year 2008. “Improper Payments” reported for 2008 include:

$10.4 billion in Medicare Fee-for-Service

$6.8 billion in Medicare Advantage.

$18.6 billion in Medicaid

According to the GAO, “This Medicaid improper payment estimate represents the largest amount that any federal agency reported for a program in fiscal year 2008.” The GAO notes that “… further work remains to put in place the internal controls necessary to effectively identify and detect improper payments.”

About the Author

Linda Fotheringill, Esq., is a founding member of Washington West, LLC, and is a nationally recognized expert on denial and appeals management. Ms. Fotheringill successfully assists hospitals across the country, overturning “hopeless” denials and generating millions of dollars in otherwise lost revenue.

Contact the Author: l.fotheringill@washingtonwest.com