Health care providers enrolled in Michigan Medicaid are subject to post-payment review by the Michigan Department of Health and Human Services (MDHHS) Office of Inspector General (OIG), which uses contracted audit vendors to examine paid claims for coding accuracy, medical necessity, and compliance with Medicaid program requirements. An adverse finding can trigger a recoupment demand reaching back several years, and where the audit applies statistical extrapolation to a claims sample, the projected liability can far exceed the claims actually reviewed. This article explains how an MDHHS Medicaid audit typically proceeds, what self-audit and disclosure options are available to a provider that identifies its own billing error, and how Michigan's administrative appeal process works.
The MDHHS Audit Process
MDHHS OIG post-payment audits are generally conducted through contracted vendors; the department has used CoventBridge Group as its post-payment audit contractor, following earlier engagements with AdvanceMed and the Recovery Audit Contractor (RAC) vendor HMS. An audit opens with a request for medical records and billing documentation. Under the state's Medicaid RAC program, the lookback period is three years, or 36 months, from the date of service, and a provider generally has 30 calendar days to respond to a records request. In more complex post-payment reviews, MDHHS OIG or its contractor issues draft findings, and the provider has 30 calendar days to submit rebuttal documentation, including its own statistical analysis where the audit relied on sampling and extrapolation to project an error rate across the full universe of claims. Findings suggesting more than an isolated billing error may be referred for further investigation, including to Michigan's Medicaid Fraud Control Unit.
Self-Audit and Voluntary Disclosure
A provider that identifies an overpayment through its own compliance review has an independent legal obligation to act. Under Section 1128J(d) of the Social Security Act, a Medicaid overpayment must be reported and returned within 60 days of identification. CMS has not issued a Medicaid-specific overpayment regulation comparable to the Medicare rule, and Michigan has not published its own self-disclosure protocol comparable to those some other state Medicaid programs maintain. Where the underlying conduct could implicate fraud rather than a simple billing error, providers more commonly use the HHS-OIG Self-Disclosure Protocol, under which CMS suspends the 60-day repayment clock once OIG acknowledges a complete, timely submission. Failing to timely report and refund a known overpayment can itself support false claims act liability or, in serious cases, OIG exclusion from federal health care programs. A self-audit that surfaces conduct meeting the credible allegation of fraud standard can also trigger payment suspension before any recoupment determination is final, so providers should involve counsel before submitting a disclosure of any complexity.
Appeal Mechanics
A Michigan Medicaid provider's right to contest an audit finding is governed principally by Michigan's Administrative Procedures Act, MCL 24.271 to 24.287 and MCL 24.301 to 24.306, together with the Medical Services Administration provider hearing rules at Mich. Admin. Code R 400.3404 to R 400.3406. After MDHHS OIG issues a Final Notice of Recovery, the provider has 30 calendar days to request either an internal conference with MDHHS Appeals or a formal administrative hearing before the Michigan Office of Administrative Hearings and Rules (MOAHR). Where a provider proceeds first through an internal conference and the recovery determination is upheld or amended, the provider then has another 30 calendar days from that decision to request a formal hearing. This two-tier structure, an internal conference before a formal hearing, differs from states such as New York, where every contested finding goes through a centralized Medicaid Inspector General audit process.
A provider that lets the 30-day window to request an internal conference or administrative hearing lapse forfeits its audit appeal rights, and MDHHS OIG will proceed directly to recoupment.
Why Early Legal Counsel Is Critical
It is critical that healthcare providers promptly retain experienced healthcare defense counsel upon receiving an MDHHS audit notice, records request, or other government inquiry related to a Medicaid billing matter. Early legal intervention can protect the provider's rights, ensure appropriate responses to government requests, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with MDHHS OIG or its contractor on the provider's behalf. Delaying legal representation can significantly affect the outcome of an audit and expose the provider to unnecessary recoupment, extrapolated liability, or referral for further investigation.
How Health Law Alliance Can Help
Health Law Alliance represents pharmacies, physician practices, and other Medicaid providers facing MDHHS OIG post-payment audits, recoupment demands, and administrative appeals, with attorneys whose backgrounds include federal and state health care enforcement. If your practice has received an MDHHS audit notice, a Final Notice of Recovery, or a request for medical records, contact Health Law Alliance's Medicaid audit defense team for a free, confidential consultation.
