Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
E  A
ARLY  SSESSMENT OF 
 
A   M I
UDIT  EDICAID  NTEGRITY 
 
C  
ONTRACTORS
 
Daniel R. Levinson  
Inspector General 
 
March 2012 
OEI-05-10-00210   
   
EXECUTIVE SUMMARY:  EARLY ASSESSMENT OF AUDIT MEDICAID 
INTEGRITY CONTRACTORS 
OEI-05-10-00210 
WHY WE DID THIS STUDY  
This study presents an early assessment of the efforts of Audit Medicaid Integrity 
Contractors (Audit MIC) to identify overpayments in Medicaid.  The combination of this 
study and a companion study, Early Assessment of Review Medicaid Integrity 
Contractors (Review MIC), offers insights into the overall effectiveness of Medicaid 
integrity contractors and the Medicaid Integrity Program.  Our objectives were:  (1) to 
determine the extent to which Audit MICs identified overpayments and (2) to describe 
any issues or barriers that hindered the identification of overpayments. 
HOW WE DID THIS STUDY 
This study focused on Audit MICs results for audits assigned between January 1 and 
June 30, 2010.  We reviewed audit assignment data from the Centers for Medicare & 
Medicaid Services (CMS) Database Audit Report Tracking System and resulting audit 
reports.  We interviewed staff from CMS, Audit MICs, and State Medicaid oversight 
agencies. 
WHAT WE FOUND 
Eighty-one percent of audits either did not or are unlikely to identify overpayments.  
Only 11 percent of assigned audits were completed with findings of $6.9 million in 
overpayments, $6.2 million of which resulted from seven completed collaborative audits 
involving Audit MICs, Review MICs, States, and CMS.  The remaining audits had not 
progressed enough to draw conclusions about likely outcomes. 
Problems with the data used and analyses conducted by Review MICs and CMS to 
identify audit targets hindered Audit MICs performance.  However, collaborative audits 
appear to have improved the selection of audit targets and the efficiency of the audit 
process, leading to better results. 
WHAT WE RECOMMEND 
We recommend that CMS:  (1) increase the use of collaborative audits and (2) improve 
audit target selection in States that choose not to be involved in collaborative audits. 
CMS concurred with both recommendations.  CMS stated that it has redesigned its 
approach to audit assignments, instructing Audit MICs to focus on collaborative projects.  
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. 
     
   
  
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................6 
Findings...................................................................................................... 11 
Eighty-one percent of Medicaid Integrity audits either did not        
or are unlikely to identify overpayments .......................................10 
Audit MICs performance was hindered because audit targets   
were poorly identified .................................................................... 11 
Collaborative audits generated 90 percent of the $6.9 million in 
overpayments that Audit MICs identified ......................................14 
Conclusion and Recommendations ............................................................17 
Agency Comments .........................................................................19   
Appendixes ................................................................................................20 
A:  Audit Process ...........................................................................20 
B:  Audit Results for Audits That Found Overpayments ...............21 
C:  Agency Comments ...................................................................22 
Acknowledgments......................................................................................25 
 
     
OBJECTIVES 
1.  To determine the extent to which Audit Medicaid Integrity Contractors 
(Audit MICs) identified overpayments. 
2.  To describe any issues or barriers that hindered the identification of 
overpayments. 
BACKGROUND 
Medicaid is jointly funded by States and the Federal Government to 
provide certain health-related services to categorically and medically 
needy populations.  Medicaid spending in fiscal year (FY) 2010 totaled an 
estimated $404.9 billion, of which the Federal share was estimated at 
$271.4 billion.1  Medicaid spending is projected to increase as Medicaid 
enrollment increases, further straining already burdened State and Federal 
budgets.2 
Fraud, waste, and abuse unnecessarily add to Medicaid program costs for 
States and the Federal Government.  The Office of Inspector General 
(OIG), the Government Accountability Office, CMS, the Department of 
Justice, and State Medicaid oversight agencies have uncovered millions of 
dollars in overpayments and fraudulent billing for services covered under 
Medicaid.  For example, CMS projected $22.5 billion in improper 
payments for FY 2010 through its Medicaid Payment Error Rate 
Measurement.3 
 
The Medicaid Integrity Program 
The Deficit Reduction Act (DRA) of 2005 established the Medicaid 
Integrity Program as the first comprehensive effort by CMS to fight fraud, 
waste, and abuse within Medicaid.4  The DRA requires CMS to fight 
fraud, waste, and abuse by contracting with entities to identify 
overpayments to providers and to educate providers, managed care 
organizations, and beneficiaries on program integrity issues.5  CMS 
created the Medicaid Program Integrity Group to administer the Medicaid 
Integrity Program and oversee contracted entities. 
 
1 Centers for Medicare & Medicaid Services (CMS), 2010 Actuarial Report on the Financial Outlook for 
Medicaid.  Accessed at http://www.cms.gov on June 15, 2011. 
2 Ibid. 
3 U.S. Department of Health and Human Services, FY 2010 Agency Financial Report.  Accessed at 
http://www.hhs.gov on August 8, 2011. 
4 DRA of 2005, P.L. 109-171  6034, Social Security Act,  1936, 42 U.S.C.  1396u-6. 
5 DRA of 2005, P.L. 109-171  6034(a)(2), Social Security Act,  1936, 42 U.S.C.  1396u-6. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  1   
   
CMS defined three types of MICs to perform the program integrity 
activities mandated in the DRA and to identify fraud, waste, and abuse:  
Review MICs, Audit MICs, and Education MICs.  Review MICs review 
State Medicaid claims data and identify potential overpayments.  Audit 
MICs audit specific providers and identify overpayments.  Education 
MICs educate providers and beneficiaries on program integrity issues. 
Audit MICs 
CMS began awarding annual Audit MIC task orders in 2008.  For 
FY 2010, three firms, Health Management Systems/IntegriGuard (HMS), 
Health Integrity, and Island Peer Review Organization, were awarded five 
task orders covering geographic areas that correspond to the 10 CMS 
regions across the country.6  CMS spent approximately $30.5 million on 
Review and Audit MICs in FY 2010, $17.2 million of which went to Audit 
MICs. 
    Identification of Overpayments 
Review MICs are contracted to identify, and Audit MICs are contracted to 
audit, providers who potentially received Medicaid overpayments.  
Review MICs conduct analysis to identify providers who potentially 
received overpayments.  CMS selects certain providers as audit targets 
from the information provided by the Review MICs and assigns them to 
Audit MICs.  Audit MICs then conduct audits to determine whether 
potential overpayments associated with the audit target (i.e., provider) 
were overpayments. 
Review MICs Identify Potential Overpayments.  CMS makes monthly 
assignments to Review MICs to identify potential overpayments.  For each 
data analysis assignment, CMS specifies the State, type of Medicaid 
claims data, and range of service dates that Review MICs are to review.  
CMS also specifies the algorithm (i.e., data analysis model) that Review 
MICs are to use to perform data analysis assignments.7  CMS expects 
Review MICs to consider any relevant State or Federal policies, such as 
maximum quantity limits for drugs, in their analyses.  Review MICs 
analyze claims submitted for reimbursement over a 5-year period (5-year 
audit window), which is the period most States require providers to keep 
records.   
 
6
 HMS was awarded task orders for Regions VI and VIII (South and Mountain West) in September 2008 and 
for Regions IX and X (West and Northwest) in May 2009.  HMSs contract for Regions VI and VIII was not 
renewed for FY 2012.  Health Integrity was awarded task orders for Regions III, IV, V, and VII (East, 
Southeast, and Midwest) in July 2009.  Island Peer Review Organization was awarded a task order for Regions I 
and II (Northeast) in July 2009. 
7
 Algorithms target specific types of potential overpayment, such as pharmacy billing errors, excessive amounts 
of service, or duplicate claims that appear to be for the same service.  CMS and all Review MICs are 
responsible for developing algorithms. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  2   
   
In a recent study, OIG found that, from assignments made during a          
6-month period, Review MICs provided CMS with lists that included 
113,378 unique providers, ranked by the amount of their potential 
overpayments.8   
That study also found that Review MICs ability to accurately complete 
assignments was hindered because data were missing or inaccurate.  
Review MICs use the Medicaid Statistical Information System (MSIS) to 
identify potential overpayments.  The MSIS is a nationwide Medicaid 
eligibility and claims data source containing a subset of data elements 
from State data systems that States report quarterly to CMS.9  OIG found 
that MSIS was missing provider identification information, adjustments 
that corrected payments, and service and beneficiary descriptions.  
Because these data were missing or inaccurate, Review MICs incorrectly 
identified potential overpayments.10  To address these issues, CMS is 
making efforts to replace MSIS with an upgraded version, called 
Transformed MSIS (T-MSIS), which will include new data fields and 
should be updated more frequently than MSIS.11 
Once Review MICs identify potential overpayments as part of their 
analyses, they send selected samples of those potential overpayments to 
the appropriate States for validation.  States determine whether the 
sampled overpayments are valid using their State data systems.  If States 
invalidate more than half of sampled overpayments, CMS requires Review 
MICs to reanalyze their data. 
CMS Selects Audit Targets.  Using the lists of providers created by Review 
MICs, CMS conducts the analysis necessary to select audit targets.  CMS 
conducts a quality assurance review before accepting Review MIC 
assignments as complete.  CMSs quality assurance review includes an 
analysis of State policies, a review of the algorithms used by the Review 
MICs, and a verification of Review MICs calculations of potential 
overpayments.  After selecting audit targets from the lists of providers 
submitted in Review MIC assignments, CMS screens the audit targets 
with States or with other Federal entities to ensure that they are not 
 
8
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
9
 MSIS data are a specified subset of fields extracted from each States unique Medicaid Management 
Information System (MMIS).  States use MMIS to process claims and monitor use of services.  MSIS includes 
files of eligible Medicaid enrollees and four Medicaid claims files:  (1) inpatient care, (2) long-term care, (3) 
prescription drugs, and (4) all other claims.  CMS, Medicaid Statistical Information System (MSIS) File 
Specifications & Data Dictionary.  Accessed at http://www.cms.gov on March 22, 2011. 
10
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
11
 CMS, Annual Report to Congress on the Medicaid Integrity Program for Fiscal Year 2010.  Accessed at 
http://www.cms.gov on August 22, 2011. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  3   
   
already being audited or investigated.  Chart 1 shows the process for 
identifying audit targets.  
 
Chart 1:  Audit Target Selection Process 
CMS makes data analysis assignments to Review MICs 
Review MICs identify potential overpayments 
Review MICs send samples of potential overpayments to appropriate States 
States review samples of potential overpayments 
Review MICs make changes to analysis based on State comments when necessary 
Review MICs send lists of providers and their potential overpayments to CMS 
CMS completes quality assurance on lists of providers 
CMS selects audit targets 
CMS screens audit targets with States or other Federal entities 
CMS assigns audit targets to Audit MICs 
Audit MICs conduct audits 
 
Source:  OIG analysis of interviews with CMS, November 2011. 
 
For the 6-month review period in a recent study, CMS filtered the full lists 
of 113,378 providers identified by Review MICs and selected 244 as audit 
targets with $39.8 million in potential overpayments.12 
Audit MICs Identify Overpayments.  After selecting the audit targets, CMS 
assigns them to the Audit MICs.  Audit MICs may request additional 
information from the State, CMS, or Review MICs for their reviews.  The 
Audit MICs then draft audit plans for CMS approval, notify the providers, 
and start the audits. 
If Audit MICs detect potential fraud during an audit, they refer the cases to 
OIG for investigation.  The Audit MICs continue to conduct the audits, but 
must receive clearance from OIG to report audit results to providers. 
 
12
 Ibid. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  4   
   
When an audit identifies no recoverable overpayments, Audit MICs 
submit a Low-No-Findings Report to CMS.  These audits either identify 
no overpayments or conclude that the amount of overpayments is too 
small to warrant recovery by CMS.  
When Audit MICs find overpayments, they submit Draft Audit Reports to 
CMS followed by Final Audit Reports.  CMS conducts quality assurance 
reviews for Draft Audit Report findings and submits them to the 
appropriate State and provider for comment.  After receiving comments 
from the State and provider on Draft Audit Report findings, Audit MICs 
make any necessary revisions to the reports and submit Final Audit 
Reports for CMS approval.  See Appendix A for a flowchart of the Audit 
MIC audit process. 
Collaborative Audits 
When States are willing to participate, CMS may assign collaborative 
audits.  Collaborative audit targets are selected with the involvement of 
Audit and Review MICs, States, and CMS.  The States provide input on 
program areas that are vulnerable to overpayments and the State policies 
that apply to those program areas.  MICs, CMS, and the States then jointly 
develop data analysis models to identify potential overpayments.  Instead 
of using MSIS, collaborative audits identify potential overpayments using 
data available in each States MMIS.13  All parties then determine which 
providers identified with potential overpayments should be audited.  CMS 
screens the audit targets with State and other Federal entities to ensure 
they are not already being audited or investigated and then assigns targets 
to Audit MICs for auditing.  
Collection of Overpayments 
States are responsible for collecting overpayments from providers as 
determined in Final Audit Reports and returning the Federal share to CMS 
within 1 year.14  Should a provider appeal audit findings, Audit MICs 
provide support to States during hearings and appeals.   
Related Work 
As previously mentioned, OIG conducted a companion study, Early 
Assessment of Review Medicaid Integrity Contractors, which focused on 
the early results of Review MICs.15  That evaluation determined the extent 
to which Review MICs completed assignments, recommended audit leads, 
and identified potential fraud.  It also described barriers Review MICs 
encountered. 
 
13
 States that participate in collaborative audits agree to share data, and in many cases States provide MICs with 
an extract from their MMIS database of the claims necessary for the collaborative audit. 
14
 Social Security Act,  1903(d)(2)(C), 42 U.S.C.  1396b(d)(2)(C). 
15
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  5   
   
In addition, a 2009 OIG report addressed the usefulness of MSIS data in 
detecting fraud, waste, and abuse.  OIG found that MSIS did not capture 
all data elements that can assist in the detection of Medicaid fraud, waste, 
and abuse.  Missing data elements include provider identifiers; procedure, 
product, and service descriptions; billing information; beneficiary 
identification information that indicates whether a beneficiary is dually 
eligible;16 and Medicaid eligibility information.17 
METHODOLOGY 
Scope 
This study focuses on Audit MICs program integrity activities for audits 
assigned between January 1 and June 30, 2010.  Because the last contracts 
were awarded in July 2009, we requested data on Audit MIC audits 
assigned by CMS between January 1 and June 30, 2010.  We selected this 
period because during this time, each Audit MIC had sufficient time to 
begin its activities; also, we wanted a 6-month assignment period upon 
which to base our findings.  We collected data through June 1, 2011, on 
the audits assigned during this 6-month period because by that date, Audit 
MICs had had nearly 1 year to conduct their audits and report results.18 
The audit targets in this report are not the same as the 244 audit targets 
identified in the report Early Assessment of Review Medicaid Integrity 
Contractors.19  Instead, this report focuses on 370 different audit targets. 
Data Sources 
Data Collection.  We collected data from CMS concerning Audit MICs 
audit activities for targets assigned between January 1 and June 30, 2010.  
For purposes of this report, we refer to audits that originated with Review 
MICs or CMS analysis as regular audits and audits that originated through 
MICs, CMS, and State collaboration as collaborative audits. 
Specifically, we collected: 
  Audit data from CMSs Database Audit Report Tracking System 
(DART).  CMS maintains DART to track the assignment, progress, 
and results of Audit MICs audits.  DART contains information 
necessary to track audit status and identifies overpayment amounts, as 
well as comments on issues that arise during audits.  DART is updated 
 
16
 Dually eligible beneficiaries are low-income seniors and severely disabled individuals who are covered by 
both Medicare and Medicaid. 
17
 OIG, MSIS Data Usefulness for Detecting Fraud, Waste, and Abuse, OEI-04-07-00240, August 2009.  
Accessed at http://oig.hhs.gov  on March 11, 2011. 
18
 Audit MIC contracts allow for a 60-day transition period after contracts are awarded. 
19
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  6   
   
weekly by Audit MICs.  The weekly update includes estimates of 
overpayments as audits progress. 
  Audit reports associated with the audits conducted during our review 
period:  Low-No-Findings Reports, Draft Audit Reports, and Final 
Audit Reports.  Audit reports include descriptions of the providers and 
services being audited, the State policies that affect audit findings, the 
specific claims that were audited and determinations regarding 
whether they were paid for appropriately, and the amount of 
overpayments identified by Audit MICs.  Audit reports also included 
barriers encountered while the Audit MICs were conducting the audits. 
Interviews.  We conducted structured interviews with staff from each of 
the three Audit MICs and from CMS to identify audit processes that Audit 
MICs followed and barriers they encountered when conducting audits.  
These interviews also included questions about Audit MIC results, the 
process for discontinuing audits, identification of overpayments, and 
issues that caused audits to result in Low-No-Findings Reports. 
We also conducted interviews with seven selected State Medicaid 
oversight agencies to gather States perspectives on the effectiveness of 
MICs.  These interviews included questions about Audit MIC results, 
communication between Audit MICs and States, and the impact that the 
Medicaid Integrity Program has on State Medicaid program integrity 
agencies.  
Data Analysis 
DART System.  Using DART, we analyzed 388 audit assignments that 
Audit MICs received between January 1 and June 30, 2010.  These 
assignments covered 27 States plus the District of Columbia.  We analyzed 
the status of assignments to determine whether each assignment was 
completed, ongoing, discontinued, or placed on hold by CMS as of 
June 1, 2011.  For the purposes of this report, we consider audits to be 
complete if they resulted in a Low-No-Findings Report, a Draft Audit 
Report, or a Final Audit Report or were discontinued by CMS.  
We also analyzed DARTs comments field to determine the reasons Audit 
MICs reported for why some assigned audits identified no overpayments.  
We created categories for the reasons Audit MICs provided based on 
common elements. 
Our findings are based on 370 assigned audits.  We dropped 18 canceled 
audits from our analysis.  CMS canceled these audits because the assigned 
Audit MICs contract was not renewed and the Audit MIC had not started 
the audits. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  7   
   
For the purposes of this report, we use the term potential overpayments 
to mean the amount of overpayments in claims initially assigned by CMS 
to Audit MICs for audit and the term overpayments to mean the amount 
of overpayments discovered by Audit MICs as a result of their audits.  We 
also refer to all audits that did not identify recoverable overpayments, 
including all audits that resulted in Low-No-Findings Reports, as having 
no overpayments. 
We determined the amount of potential overpayments using the 
Overpayments in Data Engine field.  This is the value of claims Review 
MICs identified as potential overpayments that was then passed on to 
Audit MICs. 
We determined the amount of overpayments primarily using the 
Overpayments in Initial DAR (Draft Audit Report) field.  
Overpayments in Initial DAR is a uniform point in the audit process 
when Audit MICs have completed their audits and determined whether 
payments were overpayments.  In a few cases where there was not an 
entry in the Overpayments in Initial DAR field, we used the Estimated 
Overpayments field.  The Estimated Overpayments field is the most 
recent amount of overpayments identified and may reflect adjustments to 
the overpayment amount after States and providers comment on the initial 
audit findings. 
To determine which ongoing audits were unlikely to identify 
overpayments, we compared ongoing audits targets with completed 
audits targets.  Specifically, we compared the methods used to select audit 
targets for ongoing audits with completed audits that primarily identified 
no overpayments.  When the methods were the same, we determined it 
was likely that the ongoing audits would also identify no overpayments.  
In most cases, the methods used to select the audit targets for the ongoing 
audits had been used for multiple audits that identified no overpayments. 
In addition to comparing audit target selection methods, we determined 
that those audits that did not have any overpayments in the Estimated 
Overpayments field in DART were also unlikely to identify 
overpayments.   
Audit Reports.  When completed audits resulted in Low-No-Findings 
Reports, Draft Audit Reports, or Final Audit Reports, we analyzed the 
reports to confirm and give context to information gathered from DART.  
We also reviewed these reports to determine what, if any, barriers or issues 
Audit MICs encountered during the audits.  We created categories of 
barriers, when applicable, based on common elements.  
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  8   
   
Interviews.  We analyzed the results of structured interviews with staff 
from each Audit MIC and from CMS to determine whether any 
commonalities existed in the barriers they stated Audit MICs confront 
when auditing. 
We analyzed the results of structured interviews with State Medicaid 
oversight agencies to identify any State concerns with the Medicaid 
Integrity Programs audits.  We also analyzed these structured interviews 
to determine whether selected States felt the audits assigned to Audit 
MICs were appropriate and effective for identifying overpayments. 
Data Limitations 
Because this study did not assess the results of Audit MIC activities for 
audits assigned outside the 6-month period between January 1 and 
June 30, 2010, we cannot describe the collection of overpayments or the 
results of Audit MIC activities during the entirety of their contracts with 
CMS.  However, Audit MICs were assigned 370 audits during our           
6-month review period, or 62 audits per month, from which we can draw 
conclusions about the results of Audit MICs program integrity activities. 
Because most audits had not been issued as Final Audit Reports by the 
time we completed data collection, the dollars we report as identified 
overpayments are from the Draft Audit Report stage.  Downward 
adjustments may occur between the Draft and Final Audit Reports as 
States and providers respond to the audits with supporting documentation 
that shows potential overpayment was appropriate.  Therefore, the actual 
overpayment amounts reported in Final Audit Reports may be lower than 
the overpayment amounts in this report. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  9   
   
FINDINGS 
Eighty-one percent of Medicaid Integrity audits either 
did not or are unlikely to identify overpayments 
Between January and June 2010, CMS assigned Audit MICs 370 audits 
with $80 million in potential overpayments.  Only 11 percent identified 
overpayments, totaling $6.9 million.  Eighty-one percent of the audits 
were either completed with findings of no overpayments (42 percent) or 
remained ongoing as of June 2011 and are unlikely to identify 
overpayments (39 percent).  The remaining audits were ongoing as of 
June 2011; however, there was not enough information about these audits 
to draw conclusions about their likely outcomes.  See Chart 2 for a 
breakdown of the status of audits as of June 2011. 
Chart 2:  Identified 
overpayments 
Status of 370 Audits,   
11%* 
June 2011  Ongoing; 
potential for 
  overpayments 
7% 
No overpayments 
42% 
 
Ongoing; unlikely 
to find 
overpayments 
39% 
 
  Source:  OIG analysis of Audit MIC assignments, July 2011. 
*Percentages do not add up to 100 percent because of rounding. 
Forty-two percent of audits identified no overpayments 
Forty-two percent of audits either were completed with findings of no 
overpayments or were discontinued by CMS.  Audit MICs found no 
overpayments for 85 audits.  An additional 72 audits had no overpayments 
because they were discontinued by CMS after the Audit MICs determined 
that finding overpayments was unlikely, making further audit activities 
unnecessary. 
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  10   
   
Thirty-nine percent of Medicaid Integrity audits are ongoing 
and are unlikely to identify overpayments 
Of the 370 audits in our review period, 144 are ongoing and are unlikely 
to result in findings of overpayments.  On average, these 144 audits have 
been ongoing for over 1 year; evidence from other audits and from 
progress updates in CMSs DART suggests that they will not 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.  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.  In fact, 1 Audit MIC 
confirmed that the review process for 23 of the 109 audits is complete and 
that staff found no overpayments for any audit; the Audit MIC was in the 
process of drafting Low-No-Findings Reports.  Additionally, CMSs 
DART, which tracks weekly progress updates, showed no estimated 
overpayments in weekly updates for another 48 of these 109 audits as of 
June 2011. 
Preliminary evidence for the remaining 35 of the 144 ongoing audits 
suggests that these audits are also unlikely to result in findings of 
overpayments.  As of June 2011, DART showed no estimated 
overpayments for these 35 audits in the weekly updates.  Additionally, the 
same Audit MIC as above confirmed that the review process for 2 of these 
35 audits is complete and that staff found no overpayments for either 
audit.  The Audit MIC was in the process of drafting Low-No-Findings 
Reports. 
Eleven percent of audits identified $6.9 million in 
overpayments 
Audit MICs completed 42 audits with findings of overpayments totaling 
$6.9 million.  Audit MICs identified $6.2 million of the $6.9 million in 
overpayments through seven completed collaborative audits.  The 
remaining $700,000 in overpayments was identified through 35 regular 
audits.  See Appendix B for a description of these audits. 
 
Audit MICs performance was hindered because audit 
targets were poorly identified 
Audit MICs ability to find overpayments were hindered because the audit 
targets they were provided were poorly identified.  Based on their 
contracts with CMS, Audit MICs are responsible for identifying 
overpayments among audit targets provided to them by CMS.  They are 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  11 
   
   
not responsible for selecting the audit targets.  CMS selects the audit 
targets from the lists of providers and their potential overpayments 
supplied by the Review MICs. 
For 111 of the 157 audits with no overpayments, Audit MICs discovered 
they had inappropriate audit targets.  These audit targets were 
misidentified because of problems with the MSIS claims data used to 
identify potential overpayments or the interpretation of the claims data in 
light of each States specific Medicaid program policies.  See Table 1 for a 
breakdown of the reasons 157 audits were completed with findings of no 
overpayments. 
Table 1:  Reasons Audit MICs Reported That 157 Audits Had Findings of No 
Overpayments 
Reason   Number of Audits  Percentage 
There was an MSIS data issue  57  36% 
Program policy was misinterpreted  54  34% 
Payment was appropriate (no error)  30  19% 
Review MIC analysis was missing  14  9% 
No reason given  2  1% 
   Total  157  99%* 
Source:  OIG analysis of DART and Low-No-Findings Reports, August 2011. 
*Percentages do not add up to 100 percent because of rounding. 
Audit targets were misidentified because of data problems 
Audit MICs discovered that 36 percent of the audit targets that resulted in 
audits with no overpayments were mistakenly selected based on 
conclusions drawn from erroneous MSIS data.  For some of these 
misidentified audit targets, MSIS claims data incorrectly identified the 
place of service.  These audit targets were identified through an algorithm 
intended to identify overpayments for inpatient claims.  While MSIS data 
identified the claims for these audit targets as inpatient claims, Audit MIC 
staff reported that the claims were in fact outpatient claims. 
Other audit targets had claims that were mistakenly identified as 
overpayments because the services appeared to occur after beneficiaries 
died, but the beneficiaries dates of death were incorrect. 
Additionally, 13 audit targets were misidentified because MSIS data for 
their claims were outdated.  These claims were mistakenly identified as 
overpayments because MSIS showed overpayments, but further research 
showed that the problems had already been corrected by the States and the 
changes were not reflected in MSIS. 
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Audit targets were misidentified because State program 
policies were applied incorrectly 
Audit MICs discovered that 34 percent of audit targets with no 
overpayments were misidentified because Review MICs applied State 
Medicaid program policies incorrectly.  Forty-four audit targets were 
selected because of misidentified duplicate payments for services provided 
to dually eligible beneficiaries (i.e., beneficiaries enrolled in both 
Medicaid and Medicare).  In these cases, Medicaid made two payments 
for each beneficiarys hospital stay, but both payments were appropriate.  
One payment covered all inpatient services and the second payment 
covered the coinsurance for ancillary services billed to Medicare during 
the hospital stay.  The State Medicaid agency is required to pay for the 
Medicare coinsurance for dually eligible beneficiaries.20   
Audit MICs discovered another 10 audit targets with claims that were 
inappropriately identified as overpayments because of a misapplication of 
policy.  These audit targets had claims that violated the Correct Coding 
Initiative, a national policy on medical coding edits designed to prevent 
improper billing.  However, the States these audit targets were located in 
had not adopted the Correct Coding Initiative and the claims were 
allowable under those States Medicaid policies.21 
In addition, five of the seven State Medicaid oversight agencies 
interviewed stated that the audit targets assigned by CMS were often 
inappropriate.  Staff from one State Medicaid oversight agency stated that 
a Review MIC mistakenly identified drug claims as potential 
overpayments because it believed the drug was not covered when, in fact, 
the drug was covered in that State.  Staff from another State Medicaid 
oversight agency commented that Review MICs and CMS did not 
correctly apply the States payment methodologies when analyzing State 
Medicaid claims.  
Identifying improper payments in Medicaid requires indepth knowledge of 
each States Medicaid program policies and data.  Medicaid is 
administered by States and each States Medicaid program is unique.  
States also process and store their own claims data, which contain 
variables unique to each State.22 
 
20
 Social Security Act,  1902(a)(10)(E) and 1905(p), 42 U.S.C.  1396a(a)(10)(E) and 1396d(p).  States may 
differ in the policies that determine how Medicare and Medicaid claims for dually eligible beneficiaries are 
submitted and recorded.  
21
 Social Security Act,  1903(r)(1)(B)(iv), 42 U.S.C. 1396b(r)(1)(B)(iv). The Patient Protection and 
Affordable Care Act made the National Correct Coding Initiative (NCCI) mandatory in all States for Medicaid 
claims filed on or after October 1, 2010.  However, the NCCI is not legally required for audit assignments made 
during our review because the claims associated with these audits were filed before October 1, 2010. 
22
 Ibid. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  13 
   
   
 
Audit MICs reported that problematic audit targets caused 
them to duplicate efforts 
Audit MICs reported spending significant preaudit time evaluating 
algorithms, reanalyzing MSIS data, and ensuring the accurate application 
of State policies during audit target selection.  According to CMSs DART, 
an average of 3 months elapsed between the date CMS assigned audits to 
Audit MICs and the date when Audit MICs began the audits.  Audit MICs 
stated that they needed to duplicate previous work during this time 
because of the problems they discovered with many of the audit targets. 
Additionally, Audit MICs stated that they felt compelled to duplicate 
Review MIC analyses because they could not easily communicate with 
Review MICs or States.  At the time of our review, all communications 
between Audit MICs and Review MICs were channeled through CMS.  
When an Audit MIC had questions for a Review MIC concerning the data 
analysis associated with audits it was conducting, the Audit MIC first had 
to send its questions to CMS.  CMS would then either contact the Review 
MIC or schedule a meeting between the Audit MIC and Review MIC.  
Questions for States about policies and procedures were similarly directed 
first to CMS before the Audit MIC was allowed to contact the State. 
More recently, CMS began to allow more direct communication among 
Audit MICs, Review MICs, and States.  In late 2010, CMS began 
facilitating monthly conference calls between Audit and Review MICs to 
address issues arising during audits that relate to Review MIC data 
analysis.  In addition, CMS is allowing direct communication between 
Audit MICs and States.  Audit MICs notify CMS of communication with 
the State only when the issue significantly affects the audit. 
Audit MICs also reported rescreening audit targets that were previously 
screened by CMS with States and other Federal agencies.  Audit MICs 
stated that they started this practice after CMS assigned some audit targets 
during our review that were already under State review.  In one instance, 
by the time CMS assigned the audit target to the Audit MIC, the State had 
already conducted an audit and collected the overpayments. 
 
Collaborative audits generated 90 percent of the 
$6.9 million in overpayments that Audit MICs 
identified 
Audit MICs, Review MICs, States, and CMS worked collaboratively on 
eight audits, seven of which identified overpayments, between 
January and June 2010.  Although only 7 of the 42 audits that identified 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  14 
   
   
overpayments were collaborative audits, they accounted for $6.2 million 
of the identified overpayments, compared with only $700,000 for the 
35 regular audits.  Eighty-eight percent of completed collaborative audits 
had findings of overpayments compared with only 18 percent of 
completed regular audits.   
Audit MICs also found that collaborative audits resulted in a higher 
proportion of overpayments to potential overpayments than regular audits.  
Specifically, 52 percent of the potential overpayments identified during the 
collaborative audit process were found to be overpayments.  By 
comparison, Audit MICs found that only 16 percent of potential 
overpayments identified by Review MICs and CMS for regular audits 
were, in fact, overpayments.  See Chart 3 for a breakdown of potential 
overpayments versus overpayments for 7 completed collaborative audits 
compared to the 35 completed regular audits with findings of 
overpayments. 
 
Chart 3:  $14,000,000   
Potential 
Overpayments Versus  $12,000,000 
Overpayments for 
$10,000,000 
Audits With Findings 
of Overpayments 
$8,000,000 
  Potential overpayments 
$6,000,000 
Identified overpayments 
$4,000,000 
$2,000,000 
7  35 
$0 
Collaborative  Regular 
 
  Source:  OIG analysis of audits completed with findings of overpayments, June 2011. 
Collaboration may have improved the selection of audit targets 
and efficiency of the audit process, leading to better results 
Collaboration among Audit MICs, Review MICs, States, and CMS may 
have improved audit target selection by making more accurate data 
available, improving access to State data systems and knowledge of State-
specific Medicaid policies, and decreasing duplication of effort.  Audit 
MICs completed collaborative audits an average of 2.5 months faster than 
regular audits. 
Collaboration with State Medicaid agency staff provided Audit MICs with 
access to States MMIS for claims analysis rather than using the MSIS 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  15 
   
   
data used to conduct claims analysis for regular audits.  MMIS data 
include adjustments and more up-to-date data than MSIS, thus eliminating 
some of the data problems that occur when using MSIS. 
Collaboration with State Medicaid agency staff also gave Audit and 
Review MICs a chance to gain familiarity with State-specific Medicaid 
policies and regulations, leading to improved audit target selection.  As 
staff from one Audit MIC explained, working closely with a State helps 
Audit MICs identify services and providers that are more likely to abuse 
the Medicaid program in that particular State.  Another Audit MICs staff 
commented that collaboration with States prior to the start of audit 
activities resulted in fewer problematic audit targets, yielding higher 
overpayment findings. 
Finally, collaboration may eliminate the duplication of effort that occurs 
during regular audits, making the entire audit process more efficient.  
While Audit MICs often felt compelled to duplicate Review MIC and 
CMS analysis for regular audit targets, collaborative audits involved Audit 
MICs in original data analysis and target selection.  In fact, CMSs DART 
indicated that an average of 1 month elapsed between the date CMS 
assigned collaborative audits to Audit MICs and the date when Audit 
MICs began the audits.  For regular audits, an average of 3 months elapsed 
before Audit MICs began the audits.  Furthermore, collaborative audit 
targets were screened only once, immediately preceding the start of the 
audit.  This reduces the burden on States of multiple screenings of possible 
audit targets and makes it unlikely that the Audit MIC and the State would 
conduct simultaneous audits. 
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  16 
   
   
CONCLUSION AND RECOMMENDATIONS 
Few of the audits assigned to Audit MICs from January through June 2010 
identified overpayments.  Of the 370 audits assigned to Audit MICs, 
81 percent either did not identify overpayments or are unlikely to identify 
overpayments.  Only 11 percent of assigned audits were completed with 
findings of $6.9 million in overpayments, $6.2 million of which resulted 
from seven completed collaborative audits.  Additionally, this recoverable 
overpayment total may be lowered as audit reports are finalized. 
While mixed audit results were expected, the extensive analysis used to 
identify audit targets should have yielded better overall results.  The 
majority of audit targets were identified through Review MIC and CMS 
analysis, were selected by CMS as audit targets, and were screened by 
CMS with the appropriate States and Federal entities.  Yet most completed 
audits from our review period had findings of no overpayments. 
Problems with the data and with the analyses conducted by Review MICs 
and CMS to identify audit targets hindered Audit MICs performance.  
Poor audit target selection also led to duplication of effort as Audit MICs 
chose to verify the accuracy of the analyses and rescreen selected audit 
targets.  However, collaboration among Audit MICs, Review MICs, States, 
and CMS during collaborative audits appears to have improved the 
selection of audit targets and the efficiency of the audit process, leading to 
better results. 
Because Audit MICs are only one part of the process to identify Medicaid 
overpayments, the results of this study reflect the efforts of Review and 
Audit MICs, as well as CMS.  The quality of audits conducted by Audit 
MICs depends on the quality of the audit targets selected by CMS, and 
audit target quality depends on the quality of data analyses conducted by 
Review MICs.  Thus, when combined with the companion study, Early 
Assessment of Review Medicaid Integrity Contractors, this study provides 
recommendations to improve the effectiveness of the entire process for 
identifying Medicaid overpayments.23   
CMS Should Increase the Use of Collaborative Audits 
We recommend that CMS encourage collaborative audits where 
appropriate.  We recognize that not all States will be interested in or 
capable of partnering with CMS in this way.  However, increasing the 
number of collaborative audits assigned to Audit MICs will capitalize on 
the benefits of the collaborative audit model, with potential to identify 
greater overpayments more efficiently.  Collaborative audits use more 
 
23
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  17 
   
   
complete, updated State MMIS data and knowledge of State-specific 
Medicaid policies to more accurately identify potential overpayments and 
select audit targets.  Additionally, increased collaboration among Audit 
and Review MICs, CMS, and States would eliminate the duplication of 
efforts and support recent requirements to coordinate auditing efforts.24 
CMS Should Improve Audit Target Selection in States That 
Choose Not To Be Involved in Collaborative Audits 
Given that not all States will want to partner with CMS using the 
collaborative model approach, we recommend that CMS work to improve 
the current method of identifying and selecting audit targets.  One reason 
audit targets were misidentified was misapplication of State Medicaid 
policy.  Therefore, CMS should work to improve the ability of Review 
MICs to properly analyze Medicaid data in light of State-specific policies.  
One way to do this would be to create better communication among Audit 
MICs, Review MICs, and States.  Audit MICs discovered numerous audit 
targets that were misidentified because of misapplication of State policy.  
Review MICs could benefit from this better communication as they strive 
to build more indepth knowledge of each States Medicaid program and 
policies.   
Although CMS has made some strides to improve the communication 
between Audit and Review MICs, we believe even more could be done.  
For example, interaction between Audit and Review MICs could be 
improved by combining their responsibilities and tasks under one 
Medicaid integrity contractor.  This would eliminate duplication of effort 
and reduce the burden that States face in interacting with multiple 
contractors throughout the audit process.  
To address errors in audit targeting caused by data problems, CMS needs 
to improve the quality of data MICs can access to conduct data analysis.  
We made this recommendation in the companion report, Early Assessment 
of Review Medicaid Integrity Contractors.25  We recommend that CMS 
devote the resources necessary to implement T-MSIS to make it available 
to the Review and Audit MICs, especially in States that choose not to 
participate in collaborative audits.  One of the reasons collaborative audits 
outperformed regular audits is that they had access to better data.  
Collaboration with the State Medicaid agency staff provided access to the 
States MMIS for claims analysis rather than MSIS.  MMIS is more 
complete and is updated more often than MSIS.   
 
24
 Patient Protection and Affordable Care Act, P.L. 111-148  6411(a)(1)(C), amending Social Security Act 
 1902(a)(42), 42 U.S.C.  1932a(a)(42). 
25
 OIG, Early Assessment of Review Medicaid Integrity Contractors, OEI-05-10-00200, February 2012. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  18 
   
   
AGENCY COMMENTS 
CMS concurred with both recommendations.  CMS stated that it has 
redesigned its approach to audit assignments, instructing Audit MICs to 
focus on collaborative projects.  While CMS assigned only 8 collaborative 
audits during the first 6 months of 2010, it stated it has assigned 
83 collaborative audits in the 18 months since our review.  These 
collaborative audits allow Audit MICs to work with States and obtain    
up-to-date claims data from each States MMIS. 
With respect to our second recommendation, to improve audit target 
selection in States that choose not to be involved in collaborative audits, 
CMS stated that it has several initiatives underway to improve audit target 
selection.  First, CMS is working to clarify MICs understanding of State 
Medicaid programs and policies by arranging for direct communication 
between Audit MICs and States.  In addition, CMS is working to improve 
communication between Audit and Review MICs while internally 
evaluating options for consolidating certain MIC tasks and requirements. 
Finally, CMS reiterated that several initiatives are underway to improve 
the quality of data that MICs can access for conducting data analysis.  
CMS continues to work toward improving the data available in MSIS 
through a 10-State pilot project testing the expanded T-MSIS data set.  In 
the interim, CMS is working directly with States to obtain MMIS data 
extracts for specific provider types and is leveraging data from the 
Medicare-Medicaid Data Match program.  
We made revisions to the report based on CMSs technical comments. 
For the full text of CMSs comments, see Appendix C. 
 
 
 
 
 
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  19 
   
   
APPENDIX A 
Audit Process26 
 
 
START:  Centers for 
Medicare & Medicaid 
  Services (CMS) assigns 
audit of one provider and 
  potential overpayments 
for that provider 
   
 
 
  Audit MICs start audit 
activities 
   
END:  Aud it  Full audit (no sampling) 
discontinued by CMS   
  Probe sample audit 
 
 
  Submit preliminary findings 
report to CMS 
Submit probe findings 
  Full audit    
report to CMS 
 
 
 
 
 
Submit Draft Audit Report 
END:  Su bmit  END:  Submit 
to CMS 
Low-No- Low-No-Findings 
Findings Report    Report to CMS 
 
to CMS 
 
 
END:  Submit 
Final Audit 
 
Report to CMS 
and States 
 
 
Source:  Office of Inspector General analysis of interviews with CMS, June 2011. 
 
26
 Audit Medicaid Integrity Contractors (MIC) either conduct a probe audit or immediately audit the entire 
universe of questionable claims associated with the assigned audit target, as directed by CMS. 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  20 
   
   
APPENDIX B 
Audit Results for Audits That Found Overpayments
Audit  Potential 
Provider Type  Issue  Overpayments 
Number  Overpayments 
1  Hospital  Inappropriate Service Setting  $29,649  $1,921 
2  Hospital  Inappropriate Service Setting  $31,644  $2,507 
3  Hospital  Inappropriate Service Setting  $41,845  $2,626 
4  Hospital  Inappropriate Service Setting  $200,437  $2,733 
5  Hospital  Inappropriate Service Setting  $10,173  $2,908 
6  Behavioral Health  Upcoding  $15,792  $3,825 
7  Hospital  Inappropriate Service Setting  $9,796  $3,983 
8  Hospital  Inappropriate Service Setting  $16,297  $5,561 
9  Hospital  Inappropriate Service Setting  $2,948,137  $6,012 
10  Home Health  Inappropriate Service Setting  $7,000  $7,000 
11  Mental Health Clinic  Upcoding  $10,375  $8,000 
12  Hospital  Inappropriate Service Setting  $11,587  $9,016 
13  Hospital  Inappropriate Service Setting  $26,689  $9,699 
14  Mental Health Clinic  Upcoding  $9,343  $9,800 
15  Hospital  Inappropriate Service Setting  $20,807  $10,435 
16  Mental Health Clinic  Upcoding  $12,539  $10,909 
17  Pharmacy  Pharmacy Error  $23,304  $11,304 
18  Hospital  Inappropriate Service Setting  $52,977  $11,517 
19  Hospital  Inappropriate Service Setting  $72,767  $14,268 
20  Hospital  Inappropriate Service Setting  $8,581  $16,764 
21  Hospital  Inappropriate Service Setting  $212,296  $21,027 
22  Hospital  Inappropriate Service Setting  $47,642  $23,450 
23  Hospital  Duplicate Billings  $98,223  $25,165 
24  Pharmacy  Early Refill  $36,522  $27,450 
25  Pharmacy  Early Refill  $80,170  $27,583 
26  Pharmacy  Early Refill  $31,831  $30,470 
27  Hospital  Inappropriate Service Setting  $56,818  $30,472 
28  Pharmacy  Early Refill  $80,997  $32,406 
29  Pharmacy  Early Refill  $94,202  $33,747 
30  Pharmacy  Pharmacy Error  $46,759  $34,374 
31  Hospital  Inappropriate Service Setting  $14,064  $37,041 
32  Pharmacy  Pharmacy Error  $3,686  $40,932 
33  Hospital  Inappropriate Service Setting  $45,811  $45,811 
34  Hospital  Inappropriate Service Setting  $40,658  $49,622 
35  Hospital  Duplicate Billings  $104,114  $90,466 
36  Long-Term Care  Hospice Services  $1,600,000  $218,758 
37  Pharmacy  Pharmacy Services  $240,333  $240,333 
38  Hospice  Hospice Services  $821,842  $284,645 
39  Hospice  Hospice Services  $723,678  $487,430 
40  Hospice  Hospice Services  $2,038,482  $575,808 
41  Hospital  Hospice Services  $1,420,613  $1,367,218 
42  Long-Term Care  Hospice Services  $5,095,317  $3,045,748 
Source:  Office of Inspector General analysis of the Database Audit Report Tracking System, 2011. 
 
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  21 
  APPENDIXC 
Agency Comments 
(~~.~ 
DEPARTMENT OF BRALTI< & HUMAN SERVICES  Centers for Medicare & MedICaid Services 
"1.#p ~ 
<.". (;  Administrator 
Washington. DC 2020t 
DATE: 	 FEB 0 8 ~012 
TO: 	 Daniel R. Levinson 
Inspector_General 
FROM: 	 Maiilynfla'otenner 
Acting Admillistrator 
SUBJECT: 	 Oftice of Inspector General (OlG) Draft Report: "Early Assessment of Audit 
Medicaid Integrity Contractors" (OEI-05-10-0021 0) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to comment 
on this subject OIG draft report. The objectives of the report were:  I) to determine the extent to 
which Audit Medicaid Integrity Contractors (MIC) identified overpayments and 2) to describe 
any issues or barriers that hindered the identification ofoverpayments. OIG's recommendations 
offer important strategies for improving the effectiveness of contractors' efforts to identify fraud, 
waste, and abuse in the Medicaid program that are consistent with our own assessments. 
In fiscal year 2010, CMS initiated a redesign of the Medicaid Integrity Program' 5 National Audit 
Program. Through this redesign, CMS is engaging Audit and Review MICs and the States more 
extensively to improve MIC audit targets as well as improve the quality of data accessible to 
MICs.  So far, these redesign efforts have been successful.  For example, whereas OIG reported 
eight collaborative audits assigned during its study period from January I to June 30, 2010, CMS 
has since assigned 83 collaborative audits to Audit MICs in 10 States during the subsequent 18
month period. Currently, CMS is engaged in discussions with 13 additional States to develop 
new collaborative audit projects. 
The collaborative audit efforts also involved progress in improving the quality of data accessible 
to MICs. The collaborative audits include up-to-date claims data from each State's respective 
Medicaid Management Information System (MMlS). In addition to working directly with States 
to obtain MMIS data for collaborative audits, CMS is leveraging data from the Medicare
Medicaid Data Match program, as well as obtaining extracts ofMMIS data from several States 
for projects focused on pharmacy and other specific provider types.  In addition, CMS has taken 
steps to improve communication among Audit MICs, Review MICs, and State Medicaid 
agencies to meet the challenges ofconducting Federal audits of State claims, bound by a wide 
variety of State policies. 
Our response to each ofthe OIG recommendations tollows. 
OEI-05-10-00210  Early Assessment of Audit Medicaid Integrity Contractors  22   
   
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  23 
   
   
   
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  24 
   
   
 ACKNOWLEDGMENTS 
This report was prepared under the direction of Ann Maxwell, Regional 
Inspector General for Evaluation and Inspections in the Chicago regional 
office; Thomas F. Komaniecki, Deputy Regional Inspector General; and 
Laura Kordish, Deputy Regional Inspector General. 
Mark Stiglitz and Benjamin Dieterich served as project leaders for this 
study and Cassandra Yarbrough served as analyst.  Other principal Office 
of Evaluation and Inspections staff from the Chicago regional office who 
contributed to the report include Leigh Pylman; other central office staff 
who contributed include Kevin Manley and Andrew VanLandingham. 
 
 
 
OEI-05-10-00210   Early Assessment of Audit Medicaid Integrity Contractors  25 
   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is 
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
health and welfare of beneficiaries served by those programs.  This statutory mission is carried out through 
a nationwide network of audits, investigations, and inspections conducted by the following operating 
components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 
its own audit resources or by overseeing audit work done by others.  Audits examine the performance of 
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 
intended to provide independent assessments of HHS programs and operations.  These assessments help 
reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 
and the public with timely, useful, and reliable information on significant issues.  These evaluations focus 
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of 
departmental programs.  To promote impact, OEI reports also present practical recommendations for 
improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 
misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in all 
50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the 
Department of Justice and other Federal, State, and local law enforcement authorities.  The investigative 
efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support for OIGs internal 
operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 
programs, including False Claims Act, program exclusion, and civil monetary penalty cases.  In 
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG 
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement 
authorities.