Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

 

EARLY ASSESSMENT OF

AUDIT MEDICAID INTEGRITY 

CONTRACTORS

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 
OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 1 

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 2

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

 Identification of Overpayments

 CMS spent approximately $30.5 million on 

Review and Audit MICs in FY 2010, $17.2 million of which went to Audit 

MICs.

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. HMS’s 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 3

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. CMS’s 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 State’s 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 4

already being audited or investigated. Chart 1 shows the process for 

identifying audit targets. 

Chart 1: Audit Target Selection Process

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

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. 

. 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. 

12 Ibid.

Audit MICs conduct audits

CMS assigns audit targets to Audit MICs

CMS screens audit targets with States or other Federal entities

CMS selects audit targets

CMS completes quality assurance on lists of providers

Review MICs send lists of providers and their potential overpayments to CMS

Review MICs make changes to analysis based on State comments when necessary

States review samples of potential overpayments

Review MICs send samples of potential overpayments to appropriate States

Review MICs identify potential overpayments

CMS makes data analysis assignments to Review MICs
 

OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 5

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 State’s 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 6

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

Data Sources

 Instead, this report focuses on 370 different audit targets.

Data Collection

Specifically, we collected:

. 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. 

• Audit data from CMS’s 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 7

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 DART’s 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 MIC’s contract was not renewed and the Audit MIC had not started 

the audits.
 

OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 8

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 9

Interviews

We analyzed the results of structured interviews with State Medicaid 

oversight agencies to identify any State concerns with the Medicaid 

Integrity Program’s 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. 

. 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.

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 10

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: 

Status of 370 Audits, 

June 2011

Source: OIG analysis of Audit MIC assignments, July 2011.

*Percentages do not add up to 100 percent because of rounding.

No overpayments

42%

Ongoing; unlikely 

to find 

overpayments

39%

Ongoing; 

potential for 

overpayments

7%

Identified 

overpayments

11%*

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 11

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 CMS’s 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, CMS’s 

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 12

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 State’s 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. 
 

OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 13

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 beneficiary’s 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 State’s payment methodologies when analyzing State 

Medicaid claims. 

Identifying improper payments in Medicaid requires indepth knowledge of 

each State’s Medicaid program policies and data. Medicaid is 

administered by States and each State’s 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 14

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 CMS’s 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 15

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:

Potential 

Overpayments Versus 

Overpayments for 

Audits With Findings 

of Overpayments

Source: OIG analysis of audits completed with findings of overpayments, June 2011.

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Collaborative Regular

Potential overpayments

Identified overpayments

7 35

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 Statespecific 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 16

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 MIC’s 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, CMS’s 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 17

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 18

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 State’s 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 19

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 State’s 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 CMS’s technical comments.

For the full text of CMS’s comments, see Appendix C. 
 

OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 20

APPENDIX A

Audit Process26

END: Audit 

discontinued by CMS

Submit preliminary findings 

report to CMS

START: Centers for 

Medicare & Medicaid 

Services (CMS) assigns 

audit of one provider and 

potential overpayments 

for that provider

Audit MICs start audit 

activities

END: Submit 

Low-NoFindings Report

to CMS

Probe sample audit

Full audit (no sampling)

Submit probe findings 

report to CMS

Submit Draft Audit Report 

to CMS END: Submit 

Low-No-Findings 

Report to CMS

Full audit 

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 21

APPENDIX B

Audit Results for Audits That Found Overpayments

Audit 

Number Provider Type Issue Potential Overpayments 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.
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 MedicareMedicaid 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 of conducting 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
OEI-05-10-00210 Early Assessment of Audit Medicaid Integrity Contractors 25

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.
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 OIG’s 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.