By: Carla Engle, MBA

The Medicaid Integrity Contractors are coming and are going to be reviewing Medicaid claims to see whether inappropriate payments or fraud may have occurred, as reported by contributing editor Cheryl Servais in "RACs, MACs, ZPICs and MICs - All Poised to Review Payment Errors for CMS," her dispatch that appeared in the June 18 edition of RacMonitor.

The Medicaid Integrity Contractors (MICs) were designated by the Deficit Reduction Act of 2005 to help fulfill the federal government's mandate from Congress to reduce fraud, waste and abuse in the Medicare and Medicaid federal entitlement programs.

In 2008, Medicaid ranked highest, at $18.6 billion, on a list of federal agencies issuing improper payments -- beating out Medicare, at $10.4 billion, and Medicare Advantage, far behind at $6.8 billion, according to CMS.

I myself emerged from the HCCA conference in Las Vegas a few months ago more daunted by the Medicaid initiatives than the Medicare initiatives. The sessions were slanted five-to-one on the Medicaid side, led by a rousing and intriguing presentation by Jim Sheehan, the New York Medicaid Inspector General, who is leading the charge in the states that already have rolled out their Medicaid Benefit Integrity units.

The MICs will audit Medicaid claims and identify overpayments and areas of high risk for payment error or fraud. Similar to the RACs, the MICs will use a data-driven approach to focus efforts on aberrant billing practices.

Some possible targets include the following:

• Services provided after the death of a beneficiary
• Duplicate claims
• Unbundling of services
• Outpatient claims with service dates that overlap dates of an inpatient stay

Many providers have voiced concerns that the same safeguards contained in the RAC program are not present in those of other review contractors. For example, there are no limits on the numbers of medical records or claims that can be requested for review, while RACs' maximum is 200. Other differences abound, making MICs very distinctive from their RAC counterparts: the RAC look-back period is three years, while the MICs base their reviews on individual state look-back protocol.

Likewise, the number of days a provider has to produce medical record copies for MICs is based on state rules, unlike with RACs, for which providers have 45 days, regardless of geography. And unlike the RACs, the MICs will not be reimbursing facilities for the cost of copying and mailing charts.

Unlike RACs, MICs also are not paid by contingency fees, but rather through a fee-for-service model in which dollars recovered are not tied to compensation -- although they will be eligible for bonuses based on how "effective and efficient" they are, according to CMS.

Finally, in some cases MICs will perform desk audits, and, unlike their RAC counterparts, in other situations auditors will come on-site to do reviews.

"Going to Make the RAC Look Like Kindergarten"

South Carolina was one of the first states to have MICs in place. Diane Paschal, director of corporate compliance with the South Carolina Hospital Association, said "the MICs are going to make the RAC look like kindergarten. Unlike the RAC, there are no rules for these contractors. No record limits exist, and the time allowed to respond is only 15 days." (Lubell, 2009).

According to CMS, as stated during a Medicaid Integrity Program special open-door forum on July 15, there are almost 500 Medicaid audits currently in place in 17 states, with the program scheduled to roll out to remaining states by the end of the year.

The transcript of the call is available on the CMS Web site at: http://www.cms.hhs.gov/OpenDoorForums/Downloads/BulkfileMIPProviderAudits071509.pdf