WASHINGTON, D.C. – More than four-fifths of audits performed by the Audit Medicaid Integrity Contractors (Audit MICs) during the first half of the 2010 calendar year either did not or are unlikely to identify overpayments, according to a recent report by the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG).

The Centers for Medicare & Medicaid Services (CMS) began awarding annual Audit MIC task orders in 2008, and for the 2010 fiscal year a total of three firms – Health Management Systems/IntegriGuard, Health Integrity, and Island Peer Review Organization – were awarded five task orders covering geographic areas corresponding to the nation’s 10 CMS regions. The CMS budget for Audit MICs during the 2010 fiscal year was approximately $17.2 million.

The HHS OIG report was described as an “early assessment” of the efforts of the Audit MICs to identify overpayments in Medicaid. The report’s stated objectives were twofold: to determine the extent to which Audit MICs identified overpayments during the first six months of 2010, and to describe any issues or barriers that hindered those efforts.

The report examined audit assignment data from the CMS Database Audit Report Tracking System and resulting audit reports, with interviews conducted with staffers from CMS, the Audit MICs themselves, and state Medicaid oversight agencies.

Of the 370 audits assigned to Audit MICs during the test period, 81 percent either did not identify overpayments or are unlikely to identify overpayments, the report concluded. Only 11 percent of audits were completed, with $6.9 million in overpayments revealed – and all but about $700,000 of that sum resulted from just seven collaborative audits involving Audit MICs, Review MICs, states and CMS itself, according to the report. The remaining audits “had not progressed enough to draw conclusions about likely outcomes,” the report indicated, adding that “while mixed audit results were expected, the extensive analysis used to identify audit targets should have yielded better overall results.”

“Problems with the data used and analyses conducted by Review MICs and CMS to identify and audit targets hindered Audit MICs’ performance,” a summary of the report stated. “However, collaborative audits appear to have improved the selection of audit targets and the efficiency of the audit process, leading to better results.”

The HHS OIG in the report recommended that CMS increase the use of collaborative audits and improve audit target selection in states that choose not to be involved in collaborative audits. CMS agreed with both recommendations, according to a Feb. 8 letter from Acting CMS Administrator Marilyn Tavenner to OIG Inspector David Levinson.

“CMS stated that it has redesigned its approach to audit assignments, instructing Audit MICs to focus on collaborative projects,” the report summary read. “With respect to our second recommendation, CMS stated that several initiatives are underway to improve audit target selection. First, CMS noted that it is facilitating improved communication among Audit MICs, Review MICs and states. In addition, CMS is internally evaluating options related to consolidating certain tasks and requirements of Audit and Review MICs. Finally, CMS has efforts underway to improve the quality of data that MICs can access for conducting data analysis.”

To read the full HHS OIG report, go online to http://oig.hhs.gov/oei/reports/oei-05-10-00210.pdf.

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Mark Spivey is a correspondent for the RACmonitor.com and ICD10monitor.com websites.

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