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.

As if we don’t have enough on our plates with the RAC Medicare Program, our Medicaid revenue will undoubtedly be soon subjected to similar harsh scrutiny. (Please understand that as a taxpayer, I am certainly opposed to “fraud & abuse”. However, in my personal experience evaluating and successfully appealing many hundreds of claims denied by the RACs for alleged lack of medical necessity, I know that the CMS reports of “overpayments” are misleading. Accordingly, I am concerned for Providers whenever I see that CMS has its sights set on recouping alleged “overpayments”.)

Amongst us already or coming our way is the Medicare Integrity Program, which was established through the Deficit Reduction Act of 2005 (DRA) as the first comprehensive Federal strategy to prevent and reduce “fraud and abuse” in the $300 billion joint Federal/State Medicaid program. The legislation directed the DHHS to establish a 5-year comprehensive plan to combat fraud, waste, and abuse in the Medicaid program, beginning in fiscal year (FY) 2006. The DRA requires CMS to contract with Medicaid Integrity Contractors (MICs) to audit claims to ensure that paid Medicaid claims were:

· For services provided and properly documented

· For services billed properly using the appropriate procedure codes

· For covered services

· Reimbursed appropriately according to State policies, rules or regulations

Sound all too familiar??

A CMS entity called the Medicaid Integrity Group (MIG) is responsible for implementing the Medicaid Integrity Program. The MIC Program was launched in April of 2008 with activities to be conducted in 14 States throughout CMS Regions 3 and 4.

Region 3: DC, DE, MD, PA, VA, WV

Region 4: AL, FL, GA, KY, MS, NC, SC & TN

However, since its inception and during FY 2008, the MIG has apparently focused on ramp up activities. Congress appropriated $5 million in funding during FY 2006, $50 million in each of FYs 2007 and 2008, and $75 million in FY 2009 and each year thereafter. The statute provides that these funds “remain available until expended.” As of this writing, I am unable to determine the results or the ROI of the MIC activities. However, a Report to Congress identifying the use and effectiveness of the over 100 million in funds appropriated and spent for the program thus far is due by is due by July of this year and each year of the program. (Any comments or information on MIC activity that any of the readers of this article have experienced would be greatly welcomed and appreciated!)

There are Three Types of MICs:

1. Review of Provider MICs to:

· Analyze claims data to identify potential vulnerabilities

· Provide leads/target audits to the Audit MICs

· Use data-driven approached 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 to:

· Conduct post-payment audits of Medicaid providers

· Perform combination of field audits & desk reviews

· Identify overpayments

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

3. Education MICs to:

· Develop training materials & awareness campaigns, etc.

· Highlight value of education in preventing fraud & abuse

All this might seem unfair and just too much for Providers, but a reprieve is unlikely. For a dose of reality – take a look at the U.S. Government Accountability Office (GAO) reports such as the January 2008 and 2009 updates on the Nation’s long term fiscal outlook. Rapidly rising health care costs are considered by the GAO to be the nation’s number one fiscal challenge. The GAO states:

Our updated simulations continue to illustrate that the long-term fiscal outlook is unsustainable. … According to the Social Security Administration nearly 80 million Americans will become eligible for Social Security retirement benefits over the next two decades—an average of more than 10,000 per day. Although Social Security is important because of its size, the real driver of the long-term fiscal outlook is health care spending. Medicare and Medicaid are both large and projected to continue growing rapidly in the future. (Emphasis supplied.)

The GAO goes on to state:

Medicaid and health insurance for state and local employees and retirees—is the primary driver of the fiscal challenges facing the state and local governments. As we have noted elsewhere, the expected continued rise in health care costs poses a fiscal challenge not just to government budgets, but to American business and society as a whole. In short, the fundamental fiscal problems facing all levels of government are similar and are linked. As such, solutions to address these challenges should be considered in tandem. (Emphasis supplied.)

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.”

The magnitude of the presumed “improper payments” in both the Medicaid and Medicare programs, coupled with the fiscal challenges facing our nation, no doubt means that private contractors like the RACs and MICs are here to stay.

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