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March 1, 2010

Medicaid Integrity Program Promises New Headaches
By Elizabeth S. Roop
For The Record
Vol. 22 No. 4 P. 10

If RAC audits have hospitals reaching for aspirin, then the MIP may just land them in intensive care.

It may have been flying under the radar for the past four years, but the Medicaid Integrity Program (MIP) is about to become healthcare providers’ latest challenge, with more dollars at stake and more provider types at risk.

The MIP was created by the Deficit Reduction Act of 2005 to recoup fraudulent or otherwise improper Medicaid payments through an audit system similar to its Medicare recovery audit contractor (RAC) counterpart. However, while RAC audits are targeting an estimated $10.8 billion in inappropriate Medicare payments, MIP audits are going after roughly triple that amount—an estimated $32.7 billion.

What’s more, RACs’ focus is on fee-for-service Medicare providers such as hospitals, ambulatory surgery centers, physicians, and skilled nursing facilities. Under the MIP, any fee-for-service or managed care Medicaid provider and supplier may be audited, including pharmacies, ambulance service providers, clinical labs, durable medical equipment providers, and home health agencies.

“It’s a big program, one that is very complex and diverse,” says Robin Rudowtiz, principal policy analyst at the Kaiser Family Foundation. “Unlike Medicare, the [Medicaid] program is administered by the states so there are varying ways, approaches, commitments, and investments into program integrity. One of the goals for the MIP was to bring federal resources to the table and set out some best practices and federal guidance. Prior to this, there was a great deal of diversity across states in how they were carrying out their efforts.”

Rooting Out Fraud
The MIP is designed to prevent, identify, and recover inappropriate Medicaid payments, as well as to support the program integrity efforts of state Medicaid agencies through oversight and technical assistance.

Under the program, the Centers for Medicare & Medicaid Services (CMS) is responsible for hiring Medicaid integrity contractors (MICs) in five regions. Each MIC plays one of three roles in the program:

• Review MICs analyze claims data to identify outlier claims and billing vulnerabilities and then share their findings with Audit MICs. Review MIC contracts have thus far been awarded to Thomson Reuters, AdvanceMed Corp, ACS Healthcare Analytics, IMS Government Solutions, and SafeGuard Services.

• Audit MICs conduct postpayment provider audits to identify overpayments. Audit MIC contracts have been awarded to Health Management Systems, Fox & Associates, Health Integrity, and IPRO.

• Education MICs work with Review and Audit MICs to educate providers, state Medicaid officials, managed care organizations, beneficiaries, and others on a variety of integrity issues. Education MIC contracts have been awarded to Information Experts and Strategic Health Solutions.

Activities are already under way in four regions, and the CMS expects MIP audits to be in full swing nationwide later this year. It begins with Review MICs, who review claims and work with the CMS to identify audit targets. This information is then turned over to the region’s Audit MIC.

The Audit MIC sends a notification letter to those providers selected for an audit detailing the claims and records in question. Each state determines how far back Audit MICs can go when reviewing claims and the length of time a provider has to produce the requested records in the formats specified.

The Audit MIC will also schedule an entrance conference with the provider to discuss the scope of the audit, which may be done on site or at the MIC’s office. Upon completion of the audit, the Audit MIC presents preliminary findings to the provider in an exit conference, during which the provider has an opportunity to comment or provide additional information.

If a potential overpayment is identified, the Audit MIC reports that information to the state for review. The findings and any assessments may be revised based on comments from the provider and state before it is submitted to the CMS. The final authority for the amount of any overpayment lies with the CMS, which sends the final report to the state to start the collection process.

The state has 60 days to repay the federal share of the overpayment, regardless of whether it recovers the overpayment from the provider. If a provider appeals the audit, the process is governed by state law.

Though both RACs and MICs are responsible for identifying overpayments, this is where most similarities between the programs end. For example, the RAC program has a single contractor for each region that manages audits and recovery determinations, with appeals handled at the federal level. The MIP divides responsibilities among several different contractors and assigns each a different role in the process. Appeals are handled at the state level.

“My personal opinion is that this is a more objective way to do it because you’ve got three entities looking at similar information and making a fairer decision,” says Deborah Grider, vice president of strategic development at the American Academy of Professional Coders (AAPC).

Another difference that many consider a significant improvement is that unlike their RAC counterparts, MICs are paid a fee rather than on a contingency basis. This changes the contractors’ incentive. It is also less controversial, which is one possible reason the MIP has avoided the kind of scrutiny endured by the RAC program.

“People [expect RACs] to be really aggressive and, in the demonstration project, they were. With the MIP, no one really knows what to expect although I haven’t heard any horror stories yet,” says Amy K. Fehn, an attorney with Wachler & Associates PC, a healthcare law firm based in Royal Oak, Mich.

The opportunity for providers to comment on findings before they are finalized is another benefit of the MIP structure over the RAC program. However, the variances from one state to another could prove to be problematic.

“Even though CMS is paying the contractors, the states are collecting any overpayments and it’s a state-level appeal. There is no uniform way that it is being handled,” says Fehn.

Then there’s the fact that the MIP involves both fee-for-service and managed care payment structures, whereas the RAC program has involved only fee for service. It is an unavoidable difference that promises to add a few additional layers of complexity to audit and recovery.

It is one thing to look for incorrect codes or a not medically necessary service or setting. With capitated payments, however, the audit process is far less clear-cut. Fehn suggests that MICs will probably seek to determine things such as whether quality targets or other contract requirements are being met.

“But even then, it’s tricky because the state pays the plan and the plan pays the provider,” she says. “Will the state get [overpayments] back from the plan and then the plan from the providers? Because CMS is just going to take [its share] from the state and let the state collect the overpayment.”

Preparing for Audits
As with RAC audits, preparation is the key to mitigating the impact of a MIP audit. One of the first things providers should do is understand what may trigger an audit, generally utilization patterns that fall outside the norm in a given region. While there will always be a few hospitals that accept a higher volume of Medicaid patients than others, it is the outliers that will raise a red flag with MICs.

“A lot has to do with the organization and how many times it reports certain codes. That triggers not necessarily a recovery but definitely a closer look,” says Grider. “They’re looking for utilization patterns.”

Having a compliance plan in place and following it is also critical for provider organizations of any size or type. The plan should dictate processes for routine monitoring and internal audits and for education when problems are identified.

Also important is a contingency plan that establishes the process to follow when an audit is triggered. It should identify the point person for all audit communications, as well as assign responsibility for reviewing records, documentation, and audit results.

“From a proactive perspective, the only way to prepare is to audit, monitor, and stay on top of compliance,” says Grider. “Be proactive and prepared. Don’t just put a bandage on something. It is much better [to do this] on the front end than the back end.”

Fehn points out that MIP audits will likely have short time frames for response so it’s important to make sure medical record systems are in order to enable the quick location of requested records. It’s also smart to have records formatted in a way that makes it easy for auditors to find what they’re looking for.

It is also important to have a strategy in place for any consultants and attorneys that a provider will need to advise them in the event of a repayment demand. This plan should include not only who those advisors will be but also the criteria to guide decisions regarding appeals.

“Line them up now because once you’ve been contacted, time is wasting,” says Fehn. “Unless things are really bad and there is no documentation, we always recommend appealing. First, you don’t want to be an easy target because they’ll come back at you. Second, we can argue cases generally if there is substantial compliance even if it’s not perfect. … We usually tend to have pretty good success in that regard.

“Also, if you just let it go, it can impact the future ways you do business,” Fehn adds. “For example, RACs are looking at inpatient vs. outpatient. If you don’t appeal, you’re arguably admitting that they’re right, so you’ll need to change your practices. You really have to fight it on principle or you could get into an area of criminal liability. You have notice that it was wrong in their eyes and you didn’t argue with them.”

More Than Money
While recovering improper payments is a significant driver behind the MIP, it is not the only one. Equally important is strengthening program integrity to prevent fraud and abuse at the outset. That was the finding of “The New Medicaid Integrity Program: Issues and Challenges in Ensuring Program Integrity in Medicaid,” an issue paper published by the Kaiser Commission on Medicaid and the Uninsured.

The authors found that integrity is central to program management and ensuring Medicaid’s effectiveness and efficiency. This helps ensure public confidence that the program is serving its target population, fulfilling its established purposes, and achieving its key goals.

They state that with Medicaid, integrity requires setting policy and managing the program so that health and long-term care services are provided as effectively and efficiently as possible. It also requires ensuring that quality healthcare to low-income people, as well as state and federal tax dollars, are not placed at risk by rules violations or fraud and abuse.

“One thing we tried to stress in the paper was that a lot of times, people who are looking at program integrity think of it as recouping inappropriate payments. But when we convened a group of experts, including people who focus on fraud and Medicaid directors, the focus was really much different,” says Rudowitz. “Not only was it about collecting improper payments, but [it was] also about preventing fraud and abuse in the first place.”

The experts zeroed in on proactive actions such as improved credentialing, sharing data and other information on claims and billing variances across states and even between Medicaid and Medicare, and better ways to balance the need to address fraud and abuse with the desire for beneficiaries to access services in a timely manner.

Because it brings new and greater resources to the table and provides a national framework, the MIP is expected to help state and federal agencies significantly improve integrity and prioritize where financial and other resources should go to drive maximum benefits.

“While it may be difficult to measure in dollar terms how effective [program integrity efforts] are … they are often much more effective than chasing after payments that might have been inappropriate,” says Rudowitz. “The other big thing is that there are differences between fraud and error. [The MIP’s] goal is to eliminate fraud.”

— Elizabeth S. Roop is a Tampa, Fla.-based freelance writer specializing in healthcare and HIT.