Harmony Healthcare Blog

Medicare & Medicaid Integrity Issues: Who Is Auditing Us Now?

Posted by The Harmony Team on Wed, Aug 28, 2013

In the ever changing world of Medicare review contractors, it can be hard to tell who’s auditing us now.  New Program Safeguard Contractors (PSCs) are continually being developed while others fall to the side.  To help keep you up to speed, here is some background information along with a recent update from CMS Program Integrity. 

In December of 2003, new legislation required CMS to use competitive procedures to replace its current Fiscal Intermediaries (FIs) with a uniform type of administrative entity, referred to as Medicare Administrative Contractors (MACs), a transition that was finalized in 2006.  MACs function as multi-state, regional contractors responsible for administering both Medicare Part A and Medicare Part B claims.

MACs process Medicare claims, and MACs serve as the primary operational contact between the Medicare Fee-For-Service program, and approximately 1.5 million health care providers enrolled in the program.  MACs enroll health care providers in the Medicare program and educate providers on Medicare billing requirements in addition to answering provider and beneficiary inquiries.  Collectively, the MACs and the other Medicare claims administration contractors process nearly 4.9 million Medicare claims each business day and disburse more than $365 billion annually in program payments.  Many of the Additional Development Requests (ADRs) that facilities receive are generated from their MAC.  

Seven program integrity zones were created based on the newly-established MAC jurisdictions. New entities entitled Zone Program Integrity Contractors (ZPICs) were created to perform program integrity functions in these zones for Medicare Parts A, B, Durable Medical Equipment Prosthetics, Orthotics and Supplies, Home Health, Hospice, and Medicare/Medicaid data matching. 

The primary goal of ZPICs is to investigate instances of suspected fraud, waste and abuse.  ZPICs develop investigations early and in a timely manner and take immediate action to ensure that Medicare Trust Fund monies are not inappropriately paid.  They also identify any improper payments that are to be recouped by the MAC. Actions that ZPICs take to detect and deter fraud, waste and abuse in the Medicare Program include:

  • Request medical records and documentation;
  • Conduct interviews;
  • Conduct onsite visits;
  • Identify the need for a prepayment or auto-denial edit and refer these edits to the MAC for installation;
  • Withhold payments; and,
  • Refer cases to law enforcement.

CMS is developing a new integrity contractor called a Unified Program Integrity Contractor (UPIC).  The previous Medicare Administrative Contractors (MACs) and Zone Program Integrity Contractors (ZPICs) will comprise the new contractor, though MACs will not disappear entirely, they will simply be absorbed by the UPIC.  This contractor will focus on both Medicare and Medicaid integrity issues.


Medicaid Integrity Contractors (MICs) came out of the Deficit Reduction Act of 2005 and their main function is to support State Medicaid program integrity efforts.  If you are not entirely sure of what the MICs’ role is, do not fear, as they are slowly being phased out.

Recovery Audit Contractors (RACs) are now known as The Medicare Recovery Auditors (RAs) and will still be in place to help reduce overpayments and underpayments. The Recovery Audit Program’s mission is to identify and correct Medicare improper payments through the efficient detection and collection of overpayments made on claims of health care services provided to Medicare beneficiaries and the identification of underpayments to providers so that CMS can implement actions that will prevent future improper payments in all 50 states.

The RAs have a unique process in that they post what area they are targeting on the web.  Providers are able to review their jurisdiction’s website for an update on what the RAs are finding in their data collection.  The RA review process is as follows:

  • RAs review claims on a post-payment basis.
  • RAs use the same Medicare policies as Carriers, FIs, and MACs:  NCDs, LCDs, and the CMS Manuals.
  • There are three types of review:

 1.  Automated (no medical record needed).

 2.  Semi-Automated (claims review using data and potential human review of a medical record).

  3.  Complex (medical record required).

  • RAs can look back three years from the date the claim was paid.
  • RAs are required to employ a staff consisting of nurses, therapists, certified coders and a physician Certified Medical Director.

Of course, as any of us who have been in the industry for a while know, all of this is subject to change at any time. 

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