In health care, the current mantra is that nobody does it better than the federal government. Except, it seems, when it comes to auditing the Medicaid program.
Over the last 5 years, the federal Medicaid Integrity Group (MIG) paid at least $102 million to contractors that it hired to audit Medicaid. According to a June, 2012, report from the GAO, CMS spent $120 million to uncover less than $20 million in possible Medicaid overpayments.
For every $6 spent, there is at least a potential of getting $1 back.
Officials from several states said that federal contractors used audit algorithms that were identical to or less sophisticated than the algorithms they were already using. One official said that a federal contractor went ahead and duplicated state efforts even after it was informed that it was doing so. In another case, a contractor identified overpayment to federally qualified health centers because it assumed that payments should be lower for an established payment in subsequent visits. The contractor may have been confusing Medicaid with Medicare. Medicare has separate codes, and reimbursement rates, for new and established patients. In this case, the federally qualified health centers used the same Medicaid payment rates for all visits.
The contractor audits used CMS Medicaid Statistical Information System data rather than the states’ more robust Medicaid Management Information claims data. There were 1,550 audits using the CMS data set. They identified only $7.4 million in overpayments. The 32 audits using the more detailed data in the state data sets led to the identification of the additional $12 million in possible overpayments.
The GAO numbers suggest that this program had an annualized rate of return roughly approaching that of the Cash for Clunkers program, although the CMS has not quantified how much money was actually recovered.
Despite losing about $100 million on this part of the program, the Department of Health and Human Services claims that the Medicaid Integrity Program had a positive return on investment overall. But HHS reporting is so murky that GAO notes that the truth of this statement cannot be independently assessed. In its opinion, CMS failed to clearly describe its reporting metrics.