Expand your PI efforts and get credit for your work


Posted October 1st, 2015


meeting with workers


By Jeremy Hill and Brian Fisher

As with most things, there’s a right way and a wrong way to calculate cost avoidance. Unfortunately, most program integrity (PI) units are choosing a third way — not calculating it at all.

As more states move from pay and chase to cost avoidance and recovery, few are recording and reporting the value of their efforts — efforts that may add up to millions of dollars per year.

Why the resistance?  We’ve heard the excuses —

  • “The figures are squishy.”
  • “I can’t validate the savings.”
  • “It’s too hard to track.”
  • “There are no incentives to expend the resources to drive and measure it.”

These are legitimate concerns, but they can be addressed. With cost avoidance accounting for an increasingly large portion of return on investment, pinning down these returns, documenting and highlighting them are essential to demonstrating your value as a PI unit.


In Iowa, 40 percent of the state’s $135 million four-year savings are attributed to cost avoidance.


Calculating cost avoidance isn’t as hard as it sound

1. Identify a specific change your PI unit made, such as:

  • Changing the code for a procedure — such as anesthesia for vaginal delivery — from time based to fixed fee.
  • Changing a rule so that providers are no longer reimbursed for more than one appendectomy per patient.

2. Examine the historical data for the procedure and compare the 24-month cost average before the change to the three-month cost average after the change.

3. Project by project, document any identifiable, calculable cost avoidance measures you put in place, no matter how simple or complex, and total.

Don’t take credit for cost reductions unrelated to program integrity


  • Contract terminations. If you terminate your contract with a provider, you can’t count as savings the full amount you paid the provider the previous year, as some of those payments undoubtedly did go to legitimate health care.
  • Shifts in billing and payment. If Medicare slashes MRI reimbursement rates and Medicaid follows suit, those savings aren’t PI-related, so they can’t be included.
  • Claims suspensions. Savings accrued through claims suspended temporarily as they undergo investigation, but which are eventually considered proper and paid, cannot be included.

You can claim as cost avoidance those savings achieved through:

  • Policy, rate coverage and rule changes resulting directly from your PI efforts
  • Payment and enrollment system edits
  • Changed provider behavior as a result of education or interventions
  • Provider exclusions, suspensions and practice limitations, including for identified fraud rings
  • Claim denials or adjustments resulting from prepayment detection and review

Working with law enforcement will maximize impact

To expand the impact of your PI efforts, cultivate solid relationships with law enforcement. You will gain access to data assets only they can access, such as customs and border patrol data, electronic surveillance and tax information, and with the data you provide law enforcement, agents can pursue recoveries far surpassing those typically achieved through civil court. Law enforcement investigations often result in double or triple the amount of a single, civil recovery.

Be wise with agents’ time, though. Give agents cases they can build on — cases that can result in felonies, jail time, fees and penalties. Prove yourself a trusted, reliable partner by providing:

  • Quality, actionable referrals. Make sure you provide a thorough, thought-through packet of information containing the information they need to pursue criminal investigations. This includes data, the names of policy experts and their contact information, documentation of state actions, past history and affiliations, provider agreements, emails and phone logs. Make available trial testimony and appeals, witness interviews and onsite audits.
  • Consistent support and coordination. Set up meetings, as needed, and give law enforcement agents your full attention at these meetings.
  • Timely communication. You may not hear from law enforcement for several months, but once you do, make every effort to return calls and provide requested data, documentation or other materials as quickly as possible.

Demonstrate value if you want the credit

Be sure your cost savings are noteworthy and reasonable before presenting them to stakeholders. A good rule of thumb is to ask whether you could defend your efforts before a legislative committee.

In compiling your documentation, include any emails from the state supporting your activities. Design your presentations to further this support. Highlight savings and recoveries and your means of tracking and tabulating.  Make a cumulative report available at any time for stakeholder review and future audits.

During presentations, tell stakeholders what you’re saving specifically through cost avoidance. Ask if they agree with your assessment or whether they wish to amend your report. Dialogue with stakeholders to further understanding of how the measures you’ve taken positively impact the Medicaid program.

Getting credit for your program integrity work means tracking cost avoidance as well as recoveries, and presenting achievements in a way you get buy-in from your Medicaid director, program integrity director and state legislators. Following these steps will help you win stakeholder support for current and future activity.

To learn more about expanding the impact of your program integrity efforts, read our handbook, “Identify, Predict, Prevent, Recover: A Handbook for Medicaid Program Integrity.”

About the authors

Jeremy Hill is Optum program integrity director, and Brian Fisher is Iowa Medicaid program, integrity account manager, at Optum.


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