Medicaid Audits Cost 5x’s Estimated Return According to GAO

A new report issued by the Government Accounting Office has found that contracted auditors serving Medicaid programs across the country have not had the desired impact as initially thought when the audit programs began several years ago.  The findings suggest that the cost of the Medicaid audit contractors is nearly five times the return of identified overpayments made to providers.  Estimates suggest $102 million was paid to contracted auditors since 2008 and that only $20 million has been identified as an “overpayment” in that time frame.

Federal Medicaid anti-fraud efforts were not created until 2005, when the government hired 10 companies to conduct Medicaid audits — five to analyze state data to identify audit targets, and five to audit targeted health providers. More than two-thirds of 1,550 audits of state records since fiscal 2008 were deemed “unproductive” by the GAO after they identified $7.4 million in possible Medicaid overpayments.  Conversely, twenty-six audits of health providers turned up $8.1 million in overpayments when using state supplied data. Audits conducted in partnership with states, found $4.4 million, according to the GAO.

The GAO report comes at a key point in the conversation about the regulation of contracted auditors, who have been given license to run roughshod over many providers, especially durable medical equipment suppliers and orthotic and prosthetic practitioners. The Senate Finance Committee is currently accepting public comment on the regulation of contracted fraud auditors and program integrity programs in general.  The goal is to help the Finance Committee better understand that these auditors currently have very little regulation of their work and that they work on commission — a deadly combination that is becoming costly for providers to adhere to. 

O&P practitioners and allied providers may submit their concerns and recommendations directly to OPGA and The VGM Group, which will compile a white paper for the Senate committee. Please send all concerns/recommendations related to O&P to Ryan Ball at ryan.ball@vgm.com.

Submissions are due by June 29 to the Senate Finance Committee. Those who submit papers may be contacted for a series of focus groups this summer to help formulate legislative changes that will be ready for the new Congress in January.

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