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 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.”

Among us already or coming our way soon 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 comprehensive five-year 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, ensuring that paid Medicaid claims were:

  • For services provided and properly documented
  • For services billed properly using appropriate procedure codes
  • For covered services
  • Reimbursed appropriately according to state policies rules and 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 2008, with activities to be conducted in 14 States throughout CMS Regions three and four.


Region 3:  Washington, D.C., Delaware, Maryland, Pennsylvania, West Virginia, Virginia


Region 4:  Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee


However, since its inception and during FY 2008, the MIG apparently has focused on ramping up activities. Congress appropriated $5 million in funding during FY 2006, $50 million in both FY 2007 and 2008, and $75 million in FY 2009 and in 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 more than $100 million in funds appropriated and spent on the program thus far is due by July of this year and every subsequent 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 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 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.


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.


On April 22, 2009 the GAO released a report showing substantially increased “improper payments,” and noted that Medicare and Medicaid comprise 50 percent of the reported government-wide improper payments in fiscal year 2008. “Improper payments” reported for 2008 included the following:


Medicare fee-for-service: $10.4 billion

Medicare Advantage: $6.8 billion

Medicaid: $18.6 billion


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 mean 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.

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