Medicaid Anti-Fraud Program Spent $102 Million to Find $20 Million in Overpayments

The Government Accountability Office (“GAO”) recently released a Report on the National Medicaid Audit Program (“NMAP”), which found that “private contractors received $102 million to review Medicaid fraud data, yet had only found about $20 million in overpayments since 2008.” In summary, the Report found that compared with initial test audits and more recent collaborative audits, the majority of the Medicaid Integrity Group’s (“MIG”) audits conducted under the National Medicaid Audit Program (“NMAP”) were less effective.

The GAO Report focused on the effectiveness of Medicaid audits conducted by the MIG. Three types of audits were analyzed, as outlined below, including (1) test audits, Medicaid Statistical Information System audits; and (3) collaborative audits. In each scenario, chosen contractors performed post-payment audits of Medicaid claims. The audits differed in the data sources used to identify targets and the roles assigned to the States and contractors.

(1) Test audits – Implemented in June 2007, working with the MIGs and the States, the contractor audited 27 providers based on providers identified by the States based on a review of Medicaid Management Information System (“MMIS”) data.

(2) Medicaid Statistical Information System (“MSIS”) audits – Implemented in December 2007 by hiring separate review and audit contractors (i.e., Medicaid Integrity Contractors (“MICs”) to conduct audits of those providers identified to be appropriate audit targets.

(3) Collaborative audits – In June 2011, the MIG and its contractor used MMIS data and State resources to identify audit targets.

The Report found that those audits based on MSIS data were largely ineffective. In particular, since fiscal year 2008, 4 percent of the 1,550 MSIS audits conducted identified $7.4 million in potential overpayments, 69 percent did not identify overpayments, and the remaining 27 percent were ongoing. In contrast, 26 test audits and 6 collaborative audits–which used States’ more robust MMIS claims data and allowed states to select the audit targets–together identified more than $12 million in potential overpayments. Furthermore, the median amount of the potential overpayment for MSIS audits was relatively small compared to test and collaborative audits.

Based on these results, the GAO concluded that:

The MIG reported that it is redesigning the NMAP, but has not provided Congress with key details about the changes it is making to the program, including the rationale for the change to collaborative audits, new analytical roles for its contractors, and its plans for addressing problems with the MSIS audits. Early results showed that this collaborative approach may enhance state program integrity activities by allowing states to leverage the MIG’s resources to augment their own program integrity capacity. However, the lack of a published plan detailing how the MIG will monitor and evaluate NMAP raises concerns about the MIG’s ability to effectively manage the program. Given that NMAP has accounted for more than 40 percent of MIG expenditures, transparent communications and a strategy to monitor and continuously improve NMAP are essential components of any plan seeking to demonstrate the MIG’s effective stewardship of the resources provided by Congress.

For more information on this issue, please contact Abby Pendleton or Jessica Gustafson at (248) 996-8510 or visit The HLP website.