DMEPOS Mini-Series #8 – The Six Medicare Auditing Entities and Their Purpose

The six Medicare auditing entities are responsible for auditing records, claims and payments. While they may use different methods to conduct audits, they all aim to detect, correct, and prevent improper payments to curb fraud, waste, and abuse and protect the Medicare Trust Fund. The Medicare Program Integrity Manual contains the policies and responsibilities for the entities tasked with medical and payment review.

What is the rationale for having these auditing entities? Taxpayers and future Medicare beneficiaries benefit when Medicare payments are returned to the Medicare Trust Fund. Subsequently, these audits lower the Medicare payment error rates. On occasion, pharmacies can benefit if there are any underpayments identified during an audit, in which case those dollars will be repaid to the pharmacy.

Listed below are six Medicare contractors that conduct audits and their main objectives:

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  1. MAC – Medicare Administrative Contractor
    1. Goal is to process claims for a defined jurisdiction
    2. Reviews claims on a pre-payment and post-payment basis
    3. Identify noncompliance with coverage, coding, payment, and billing policies through data analysis
    4. Take action to prevent and address improper payments
  2. UPIC – Unified Program Integrity Contractor
    1. Goal is to investigate cases of suspected FWA
    2. Take action to recoup inappropriate Medicare payments
    3. Ensure the integrity of claims under all lines of Medicare business
  3. SMRC – Supplemental Medical Review Contractor
    1. Goal is to lower the improper payment rates by conducting nationwide medical reviews with documentation requests
  4. CERT – Comprehensive Error Rate Testing Contractor
    1. Goal is to collect documentation and perform reviews on random samples of Medicare FFS claims post-payment
    2. Determine whether claims were paid appropriately based on Medicare coverage, coding, and billing rules in place
    3. Produces the improper payment rates to the MACs who can repay underpayments and recoup overpayments
  5. RAC – Recovery Audit Contractor
    1. Goal is to identify overpayments and underpayments by conducting automated and complex reviews on a post-payment basis
      1. Automated – no medical records needed
      2. Complex – medical records required
    2. OIG – Office of Inspector General
      1. Goal is to lead efforts to fight FWA
      2. Develop and distribute resources to help the health industry comply with FWA laws
      3. Education the public about fraudulent schemes
      4. Responsible for reporting to both the Secretary of Health and Human Services (HHS) and Congress and to provide recommendations to correct FWA

PAAS Tips:

  • Be prepared with FWA policies and procedures, should you not have a compliance program in place, learn more about PAAS’ Fraud, Waste & Abuse and HIPAA Compliance program or contact our office at 608-873-1342
  • Reminder: Send your Medicare Part B audits to PAAS! or fax (608) 873-4009 and we can advise what documentation is being requested and help navigate the Medicare Part B requirements and responses to audits.

Jennifer Ottman, CPhT