The CMS is attempting to clarify the role of new federal contract audits being performed under Medicaid that providers fear will operate in a similar fashion to the controversial Recovery Audit Contractor program in Medicare.
Some wary of RAC's cousin
Exec: MIC makes RAC seem like child's play
Medicaid Integrity Contractors, or MICs, were designated by the Deficit Reduction Act of 2005 to help fulfill the federal governments ongoing quest to reduce fraud, waste and abuse in the entitlement programs. Medicaid in 2008 topped the federal agency list on improper payments at $18.6 billionbeating out Medicare, which accumulated $10.4 billion in inappropriate payments and even Medicare Advantage, which trailed behind at $6.8 billion, according to the CMS.
The overarching goal of the contractors, who are expected to be operating nationwide in just a few months, is to identify overpayments in an effort to decrease inappropriate Medicaid claims. Activities under the MIC program include reviewing Medicaid claims to seek out potentially inappropriate payments; auditing Medicaid claims and identifying overpayments; and educating state Medicaid officials, providers and beneficiaries on payment integrity. The White House has made preventing fraud a top priority (May 25, p. 12).
Unlike RACs, MICs do not work on a contingency basis. But some say they could be more disruptive because the MICs operate under different rules. The CMS expects to spend $50 million in fiscal 2009 on MIC audit, review and education. So far, the experience with the MIC process has not been very positive, said Diane Paschal, director, corporate compliance with the South Carolina Hospital Association. South Carolina is one of the first states to have MICs in operation.
The MICs are going to make the RAC look like kindergarten. Unlike the RAC, there are no rules for these contractors. No record limits exist, and the time allowed to respond is only 15 days. But because the program has yet to be rolled out in most parts of the country, Paschal and others in the industry acknowledge that many providers are adopting a wait and see approach to the MICs.
CMS officials contend the Medicaid audits will be fundamentally different from the RAC program. A lot of misinformation has been floating around about the emerging Medicaid audits, according to a CMS spokeswoman who spoke on the condition she not be identified. MICs and Medicare RACs are alike in that both seek to identify overpayments to providers, using auditors procured and hired by the CMS, the spokeswoman said. But one chief difference between the RAC and MIC contractors is the MICs will not be compensated via contingency fees, unlike the RAC, which allows third-party auditors hired by the CMS to keep 9% to 12.5% of payments they identify as improper.
Awards on task orders for the MICs began in spring 2008, after being pilot-tested in four states. Actual audits began in a few states during the last quarter of 2008 and have increased steadily throughout the first half of 2009, the spokeswoman said. The expectation is the agency will award task orders for Medicaid auditors in all 50 states by the end of fiscal 2009.
Molly Collins Offner, director for policy development with the American Hospital Association, said the AHA has been working with the CMS and state associations to educate hospitals on the new Medicaid audit program so they know whats going on here.
Whats not clear is who will lose financially, Collins Offner said. Unlike Medicare, where the payment process is more cut and dry, Medicaid involves the states as well as the providers. If an overpayment is identified, it is the state that is responsible for processing and adjudicating the overpayment. How this will trickle down to the provider level, has yet to be determined, she said.
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