Medicaid Audits Cost Far More than Discovered Fraud

Although the Medicaid Integrity Group (MIG) was created to fight fraud in the health system, it may have been the biggest fraud of all. Over the past five years, MIG has spent at least $102 million while only finding $20 million in overpayments, according to investigators.

The Government Accountability Office (GAO) released a report on the program and found that part of the problem was that the database used. The Medicaid Statistical Information System (MSIS) is an extract of states’ claims that misses key elements necessary for auditing.

“Since fiscal year 2008, 4% of the 1,550 MSIS audits identified $7.4 million in potential overpayments, 69% did not identify overpayments, and the remaining 27% were ongoing,” according to the GAO report.

In comparison, test audits using the states’ more robust Medicaid Management information System data identified more than $12 million in potential overpayments.

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More than two-thirds (69%) of the audits assigned through contractors were discontinued, had “low or no findings” or were “put on hold.”

Until 2005, Medicaid program integrity had been a state responsibility, primarily. However, the Deficit Reduction Act of 2005 made the Centers for Medicare & Medicaid Services responsible for oversight.

The Medicaid program consists of 56 distinct state-based programs. The sheer size and diversity makes the program vulnerable to improper payments. As a result, GAO has had the Medicaid program on its list of high-risk programs since 2003.

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