Medicare Compliance & Reimbursement

If you think the Recovery Audit Contractors (RACs) are bad, you may not yet have heard about the Medicaid Integrity Contractors (MICs) who are already auditing hospitals, skilled nursing facilities, pharmacies, and other providers in some states.

Although MICs are focused on Medicaid, they may intersect with Medicare, and could also pave the way for major compliance headaches -- in other words, prepare for trouble ahead.

"Absolutely, I think we'll see cross-referrals between the MICs and Medicare," predicts attorney Paula Sanders, a partner with Post & Schell in Harrisburg, Pa. And unlike the RACs, which are paid on a contingency basis, the MICs are "much more narrowly focused on fraud, abuse and waste," Sanders warns. In addition, "the MICs will be working more closely with the OIG and Department of Justice."

The good news: The following combo of strategies can help you stay out of the government's crosshairs on the Medicaid and Medicare compliance sides.

The MICs "may look to see if another insurance should have picked up the bill" instead of Medicaid, warns Betsy Anderson, a VP at FR&R Healthcare Consulting in Deerfield, Ill. In some cases, the primary payer for a service may be Medicare Part B. "It depends on the state" in terms of "what's included in the Medicaid rate component -- especially for SNFs," Anderson instructs. "Many states have an offset if the nursing facility uses Part B for the Medicaid resident's therapy."

Part B may also be the primary payer for certain outpatient services where Medicaid will pick up the copy for a dual-eligible patient who has both Medicare and Medicaid coverage.

(Resource: For more information on dual-eligible beneficiaries, please visit: www.cms.hhs.gov/DualEligible/.)

Watch out: MICs could also audit claims where Medicaid is the secondary payer for a claim, according to a CMS Special Open Door Forum on the MICs. "If Medicaid money is involved ... then we feel we have the right to look at it ...," said ODF presenter Jim Gorman, director, Division of Medicaid Integrity Contracting with the Program Integrity Group at the Center for Medicaid and State Operations.

Proactive strategy: Don't ever assume Medicaid is a patient's primary payer. Always ask the patient and/or his responsible party at each admission or healthcare encounter if he has any other health insurance -- and, if so, whether that payer will cover the service(s).

"MICs may look to see if there are duplicate claims for more than one payer type, given that Medicaid is the payer of last resort," cautions Anderson. And these days, auditors can more easily "data mine across all providers and payer types," cautions Sanders. In fact, the government is now using patients' identifying numbers "to see who has billed for services and in what settings on any given day," Sanders reports.

Example: Suppose a nursing home patient on Medicaid goes to the hospital for a procedure and doesn't return to the facility in time for its midnight census. The nursing facility should not receive payment for that day,

Anderson says. "The same could happen on the hospital side based on the hour of [the patient's] admission."

Where MICs go in terms of identifying issues to audit, the RACs could eventually follow. Billing issues identified by a MIC -- "or any other enforcement agency" -- could "inform" RACs about where to target their investigations, cautions Donna Thiel, a shareholder with the Washington D.C. office of Baker, Donelson, Bearman, Caldwell & Berkowitz.

Survival strategy: Get a step ahead of the MICs by networking with healthcare associations and other providers to keep track of what the MICs are up to. Some of what MICs are looking for, says attorney Joanne Erde, partner, Duanne Morris in Miami, Fla., may include:

• Services not provided or properly documented;

• Improper billing codes;

• Non-covered services; or

• Unbundling.

"What MICs target, however, may vary from state to state due to the differences among the various states' Medicaid reimbursement methods," adds Erde. For example, "in a state that pays different amounts for an E/M code, [the MICs] may evaluate E/M coding" -- but not in a state where Medicaid pays one rate regardless of the level of E/M code, she says.

The government's message "these days seems to be that if we paid you -- we want our money back," says Sanders. "This attitude makes it even more important for [healthcare providers] to document in a way that ... provides a picture that a reviewer can understand."

And don't let your guard down even after an audit shows you're home free. Sanders has a client that just completed "a MIC audit with no adverse findings. And the closing letter provided no comfort that the provider wouldn't get re-audited on the same issue that the MIC found it was clean on."