Medicaid Audits

While many providers are focused on the Medicare Recovery Audit Contractor ("RAC") program, attention must also be paid to the Medicaid Integrity Program (MIP). MIP will consist of audits similar to those of the RAC program as a continued effort to increase detection, enforcement, and prevention of Medicaid fraud and abuse.

The Deficit Reduction Act of 2005, mandated the creation of the Medicaid Integrity Program (MIP), including the hiring of Medicaid Integrity Contractors (MICs) to perform review, audit, and education functions. The aim of the MIP is to prevent, identify, and recover inappropriate Medicaid payments. The MIP also supports the program integrity efforts of state Medicaid agencies through a combination of oversight and technical assistance. CMS’ responsibilities under the MIP are two-fold: (1) to hire contractors to review Medicaid provider activities, audit claims, identify overpayments, and educate providers and others on Medicaid program integrity issues; and (2) to provide effective support and assistance to the states in their efforts to combat Medicaid provider fraud and abuse.

There are three types of MIC contractors: review MICs, audit MICs, and education MICs. Unlike the RACs who are limited to a 3-year look back period, audit MICs may review claims looking back up to five years.

Once selected, the provider is referred to the audit MIC who is responsible for performing the audit. The audit MIC will send a notification letter setting forth the records being requested from the provider. The audit MIC is also responsible for contacting the provider to set up an entrance conference during the early stages of the audit process. Audit MICs have the discretion to perform a field or desk audit depending on which is deemed more efficient in a given situation. When conducting an audit, MICs, unlike RACs, do not have medical record request limitations.

Once the audit is completed, the audit MIC is expected to prepare a draft audit report. The draft report is shared with the state Medicaid agency for review and comment to ensure that the state’s Medicaid policies were appropriately interpreted. The draft report is share with the provider who is given 30 days to comment and submit additional supporting information.

Audit MICs are not paid on a contingency fee basis and are not responsible for collecting overpayments from providers. Instead, the federal government collects its share of identified overpayments directly from the state, and the state is responsible for recovering the overpayments from the providers. As with the RAC program, payments to providers may be suspended once overpayments are identified. All MIC audit provider appeals are handled through the state appeals process pursuant to state law.