Review of Medicaid Audit Program Finds Big Flaws

Flaws in processes and use of data are significantly hindering recoupment of Medicaid overpayments under the Medicaid Integrity Contractor Audit program, according to a new report from the Department of Health and Human Services’ Office of Inspector General.

The 370 audits were assigned between January and June 2010 with an estimated $80 million in potential overpayments, but the 11 audits revealing overpayments only yielded a total of $6.7 million. By June 2011, most of the rest of remaining audits were completed with no finding of overpayment, or ongoing but unlikely to identify overpayments.

“Specifically, 109 of the 144 ongoing audits are unlikely to identify overpayments because the methods used to select the audit targets have already proven unsuccessful,” according to the OIG report. “The 109 audit targets were selected using the same algorithms in the same states as other completed audits that primarily had findings of no overpayments.”

Further, 36 percent of 157 audits with no overpayments were mistakenly selected based on conclusions drawn from erroneous data. The data identified the claims for audit targets as inpatient claims, when they were in fact outpatient claims. In 13 other audits, claims data were outdated; the claims were identified as overpayments, but problems had been corrected with changes not reflected in the database.

Among its recommendations, OIG calls for more collaborative identification of audit targets by contractors that conduct audits, contractors that review audits, the states and the Centers for Medicare and Medicaid Services.

Also, improving the ability of review contractors to analyze Medicaid data in the context of state-specific policies through better communication would reduce targets misidentified because of misapplication of state policy, according to OIG. The report, “Early Assessment of Audit Medicaid Integrity Contractors,” is available here.