Consolidation Comes to Health-Care Anti-Fraud Contractors

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By James Swann

Government health-care anti-fraud contractors may increasingly operate under fewer programs as the Trump administration looks to rein in government spending and streamline the fight against fraud.

Much of the Centers for Medicare & Medicaid Services’ work on program integrity has been delegated to contractors, and some have had “pretty unspectacular results,” bolstering the cause of consolidation, Ellyn Sternfield, a health-care attorney with Mintz Levin in Washington, told Bloomberg BNA.

Consolidation of Medicare Contractor Programs

Contractor consolidation could benefit hospitals and providers by eliminating redundant programs and providing more uniform policy guidance for the remaining contractors.

A first step toward consolidation began with last August’s award of seven contracts under the Unified Program Integrity Contractor (UPIC), which replaces four existing contractor programs. AdvanceMed, owned by NCI Information Systems Inc. and based in Reston, Va., was one of the seven vendors to win a UPIC contract and was also awarded the program’s first task order, for $76.8 million.

UPICs are intended to replace Zone Program Integrity Contractors (ZPICs), Program Safety Contractors (PSCs), the Medicare-Medicaid data match program (Medi-Medi) and Medicaid Integrity Contractors (MICs).

“For example, when it came to the MIC contractors, there were questions about their data sources,” Sternfield said. Many MIC auditors didn’t seem to understand that the individual states set Medicaid billing requirements, not the CMS, and that state requirements change regularly, Sternfield said.

“MIC audit findings often didn’t hold up because of data irregularities or the fact that contractors were attempting to apply inapplicable rules to a particular provider’s Medicaid billings,” Sternfield said.

The Health and Human Services Office of Inspector General reviewed the MIC program in 2012 and found that only 25 of 125 MIC audits resulted in overpayment findings, Sternfield said.

“The idea of UPIC consolidation was to improve the efficiency of program integrity work, and part of the consolidation plan was the creation of a unified case management system so that the contractors weren’t duplicating work or stepping on each other’s cases,” Sternfield said.

New Contract Awards

The new UPICs were awarded indefinite delivery, indefinite quantity contracts, which are used when a government agency can’t determine the precise amount of supplies or services that will be needed during a contract period.

The seven vendors that won contracts can bid on the five jurisdiction task orders under the overall contract (AdvanceMed won the Midwest task order). The task orders cover the Midwest, West, Southwest, Southeast and Northeast.

AdvanceMed’s task order will include fraud lead screening, investigation, medical reviews and collaborating with the CMS and state and local government and law enforcement. Fraud lead screening involves reviewing and following up any leads on potential health-care fraud.

The Midwest jurisdiction covers Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio and Wisconsin.

Bids for the Southeast and Southwest jurisdictions are currently being solicited, Ashley Stessman, a senior marketing communications specialist with StrategicHealthSolutions LLC, told Bloomberg BNA. Stessman said she didn’t know when the northeastern and western task orders would be awarded.

Omaha, Neb.-based StrategicHealthSolutions was one of the seven vendors awarded an overall UPIC contract in August 2016.

Cutting Costs

Despite the efficiency goals of consolidation, it’s hard to say whether it can really cut costs, Judith Waltz, a health-care attorney with Foley & Lardner in New York, told Bloomberg BNA. “CMS put the brakes on some contractor consolidations previously because it said it was worried about reducing competition in the Medicare Administrative Contractor market,” Waltz said.

Theoretically, Waltz said, some contractors could win contracts in multiple jurisdictions, meaning there would be unofficial semi-consolidation since they’d presumably be using the same systems and even the same personnel.

“I think the approach definitely could sweep up the RACs at the federal level,” Waltz said, noting that any consolidation would only apply to Medicare recovery audit contractors. Medicaid RACs are unique to each state and wouldn’t be affected by a federal contractor consolidation, Waltz said.

Waltz said the CMS posts future contracting availability on the federal contracting database, along with the scope of work required, and said contracts can’t be consolidated or abandoned quickly.

Excluding RACs

The move to UPICs didn’t include RACs, which are distinguished from other contractors by their contingency fee payment model, Sternfield said.

Sternfield said she hoped HHS Secretary Tom Price or the new CMS administrator would address program integrity in conjunction with program policy and not in isolation.

“For example, if there’s going to be a further loosening of rules on Medicaid coverage to give states more flexibility in designing their individual Medicaid programs, isn’t the MIC program obsolete?” Sternfield said.

Sternfield also said the continuing litigation over the Medicare appeals backlog may make dissolving or consolidating RACs impossible. RAC appeals are the main cause of the huge administrative appeal backlog at the CMS, which is the subject of a court order, Sternfield said.

“And given that many of these programs, including the RACs, are the subject of legislative mandates, will the administration and Congress support the necessary legislation to cut them out?” Sternfield said.

Providers and Consolidation

Support for contractor consolidation is divided within the provider community, Waltz said. On the one hand, consolidation could bring about a more unified approach to contractor policies. Currently, contractors operate under their own guidance, and some are more comprehensive than others, Waltz said.

“On the other hand, every time there’s a contractor change, there’s at least some disruption in operations that results in delays or worse if the files aren’t transitioned appropriately,” Waltz said.

Medicare contractors have changed frequently over the past decade, Waltz said, which has led to some confusion over local coverage determinations and other policies, as well as lost files.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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