Ingenix to audit Alabama Medicaid claims: Potential bellwether?

Ingenix, a subsidiary of UnitedHealth Group, has inked a two-year, performance-based contract to audit claims for the Alabama Medicaid Agency, and the agreement could be a sign of the way the auditing wind is blowing for hospitals and other providers across the country. While many hospitals found their Medicaid claims being audited for practically the first time with the 2009 launch of the national Medicaid Integrity Program (MIP) provider audits conducted by Medicaid integrity contractors (MICs), Medicaid audits still have not been as prevalent as Medicare reviews.

But that imbalance is changing thanks to hard-charging states like Alabama--and likely will correct even further now that the Patient Protection and Affordable Care Act has mandated the expansion of the Medicare recovery audit contractor (RAC) program in Medicaid, as well as Medicare Parts C and D, by year-end. The Alabama/Ingenix contract could offer hospitals a glimpse of how the state Medicaid RACs will operate. (That said, it is worth noting that this contract does not fall under the umbrella of the MIP or any other federally driven program.)

Here's how it works: Eden Prairie, Minn.-based Ingenix will conduct post-payment reviews of Medicaid claims filed by all Alabama providers over the past two years. "Ingenix will use all claims from a two-year period to develop certain algorithms. Potential overpayments will be identified, and letters [will be] mailed to providers seeking repayment of those identified overpayments. If a provider disagrees with the findings, they will be able to submit medical records to Ingenix for review," Robin Rawls, spokeswoman for the Alabama Medicaid Agency, tells FierceHealthFinance. The overpayment letter will include the provider's response time and appeal rights, says Rawls.

"The Ingenix approach to fraud, waste and abuse is to ensure that all communications to providers requesting any money back detail the specific payment policy, AMA [American Medical Association] coding policy or other requirement that has been violated," adds Tom McGraw, vice president of government program integrity at Ingenix. Rather than a flat fee, Ingenix will be paid a percentage of the overpayments that are recovered. The percentage for fiscal year (FY) 2010 will be 11 percent, and the percentage for FY 2011 will be 9.9 percent, says Rawls.

Ingenix currently has six contracts with state Medicaid programs for fraud, waste and abuse identification services or related support, says McGraw. "Two of the contracts, including Alabama, have recovery, and this is also an optional service on a third contract." The Alabama deal marks Ingenix's first contingent contract with a state. However, the company contracts with 14 Medicare Advantage and Medicaid health plans, and "contingent contracts represent the majority of our revenue" from those, McGraw points out.

To learn more:
- read this Minneapolis/St. Paul Business Journal article
- read the press release about the contract
- visit the Centers for Medicare and Medicaid Services webpage on MIP audits

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