By: Carla Engle, MBA

Wolters Kluwer/MediRegs

From CERTs to ZPICs, there is a host of Medicare and Medicaid auditing bodies, scouring for evidence of improperly paid claims as well as fraud and abuse. As you are preparing yourself for the RAC, you also need to be prepared for these and other entities as well.

With the inevitable RAC audits coming up as soon as next month, you need to be prepared for the possibility of one or more of these showing up at your door.

Here is a brief line up of the other possible governmental entities that you might be seeing requests from, if you haven’t heard from them already:


  • MACs

    The new contract entities called Medicare Administrative Contractors (MACs) are replacing Medicare’s claims payment contractors known as fiscal intermediaries (FI) and carriers. Around the country, many providers that have converted to their MACs are already receiving preemptive audits from their MACs in advance of the RAC audits.

  • ZPICs

    Since 1997, specialty Medicare contractors known as Program Safeguard Contractors (PSCs) were charged with identifying and investigating fraud and abuse in the Medicare program. Within a state or region (or task order as the contracts were assigned), there were several PSCs in operation and each was responsible for program integrity activities related to specific claim types: Part A; Part B; Durable Medical Equipment Prosthetics and Orthotics (DMEPOS); and Home Health and Hospice with as many as three or more separate PSCs that may have been operating in a state or region.

    Under the Zone Program Integrity Contractor (ZPIC) contracts now, program integrity activities related to these claim types will be the responsibility of a single contractor. The award of these contracts aligns Medicare program integrity functions with the new Medicare Administrative Contractors as required by the Medicare Modernization Act of 2003.
    Implementation of the ZPIC is designed to streamline program integrity functions, allowing a single entity to address healthcare fraud and abuse across all claim types. ZPICs can make referrals to the HHS-OIG as well as the FBI and U.S. Attorneys for suspected fraud cases.

  • CERT

    CMS developed the Comprehensive Error Rate Testing (CERT) Program to produce a national Medicare FFS error rate as required by the Improper Payments Information Act. CERT randomly selects a small sample of Medicare FFS claims then reviews the claims and medical records from providers/suppliers who submitted the claims, and reviews the claims for compliance with Medicare coverage, coding, and billing rules.

    The results of the reviews are published in an annual report (and semi-annual updates).

  • QIOs

    Quality Improvement Organizations (QIOs) monitor the appropriateness, effectiveness, and quality of care provided to Medicare beneficiaries. They are private contractor extensions of the federal government that work under the guidance of the Centers for Medicare and Medicaid Services (CMS).

    In recent years, QIOs have undertaken to facilitate continual improvement of health care services within their constituent communities in addition to their original and ongoing statutory audit/inspection role of medical peer review. QIO medical review probes are usually limited in scope and are designed as minimal, targeted provider oversight audits. Reviews often include cases from acute care hospitals to ascertain that the care rendered was appropriate, medically necessary, and billed and coded correctly.

  • Medi-Medi

    Medicare and State Medicaid Benefit Integrity units began combining and comparing claims data from Medicare and Medicaid to detect potential fraud and abuse patterns that previously were invisible to either program when examined independently. The California Medi-Medi project began in 2001, followed by ten states doing dual investigations as pilot projects.

    CMS reports that fully operating Medi-Medi projects yield $5.50 in savings for each $1 spent, so it has obviously been very successful.

  • MICs

    The Deficit Reduction Act (DRA) of 2005 created the Medicaid Integrity Program (MIP) which offered a unique opportunity to identify, recover and prevent inappropriate Medicaid payments. The MIP created a series of new federal contractors, collectively known as Medicaid Integrity Contractors (MICs), to audit Medicaid providers and health plans, identify inappropriate payments, and educate providers and plans on proper claiming.

    The MICs are involved in auditing Medicaid claims and identifying overpayments.

  • MFCU

    State Medicaid Fraud Control Units (MFCUs) have long been in the lead of health care fraud enforcement. A MFCU is charged with investigating fraud in the administration of the state Medicaid program and is intended to operate as a “strike force” using a multi-disciplinary approach, with the team of investigators and auditors directed by an attorney. In most states, the MFCU is a part of the Attorney General’s office.


RACs Can Report Fraud and Abuse

Even though the RAC program was designed to: 1) detect and correct past improper payments in the Medicare program and 2) provide information to CMS and the Medicare claims processing contractors that could help protect the Medicare Trust Funds by preventing future improper payment, the RACs ARE authorized to report suspected fraud and abuse.

The Medicare Modernization Act of 2003 (MMA) does not prohibit investigations by CMS of fraud and abuse originating from a RAC investigation or overpayment determination and other governmental auditing bodies will have access to the denial statistics. Interdepartmental referrals may happen, too, particularly if there are allegations of suspected fraud or abuse, especially because of the success rates of combined departmental efforts, like Medi-Medi.

Use this pre-RAC time to shore up your audit processes for ALL payer claim-based audits, including your ability to all track audit activities across all departments and track and formulate your appeal strategies.


About the Author

Carla Engle, MBA – Product Manager

Carla’s background includes over twenty years in hospital and physician practice operations, particularly in reimbursement and billing functions. Prior to joining Wolters Kluwer recently, she was the Vice President of Compliance for a national revenue cycle solutions company and prior to that was in the Reimbursement Training Department with HCA. For several years she headed up the Part A Fraud Investigation Unit for a CMS Program Safeguard Contractor (PSC) where she was successful in the prosecution of several national cases. In her revenue cycle compliance capacity, she worked with a number of clients in California and Florida with Recovery Audit Contractors (RACs) in setting up processes and appeals.


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