What Is Medicaid Program Integrity? The State and Federal Offices That Audit NEMT Claims

Program integrity is the name for everything Medicaid does to make sure it paid the right amount, to the right provider, for a service that really happened. For a NEMT company it is not one office. It is a set of state and federal reviewers that can each ask for your trip records, and the letter you get tells you which one you are dealing with.

What Medicaid program integrity means

Federal rules give every state Medicaid agency the same basic duties. It must have methods for spotting suspected fraud and for investigating it with due process (42 CFR 455.13). It must look into every complaint of fraud or abuse and every questionable practice it finds, and refer a provider suspected of fraud or abuse to the state’s Medicaid Fraud Control Unit (42 CFR 455.14 and 455.15). It must also run a statewide surveillance and utilization control program and review paid claims after the fact, using provider profiles and exception reports (42 CFR 456.3 and 456.23).

When a review finds a problem, the state can send a warning letter, recover the payments, suspend or terminate the provider, or impose other sanctions (42 CFR 455.16). Once it finds a credible allegation of fraud under investigation, it must also hold your payments unless it has good cause not to (42 CFR 455.23). See Medicaid payment suspension.

CMS oversees the states through its Center for Program Integrity. It runs focused reviews of state oversight in high-risk areas such as nonemergency medical transportation, and in fiscal year 2024 it ran 47 desk reviews of state programs on topics that included NEMT, according to its report to Congress of September 2025.

Which offices review NEMT claims

Several reviewers can reach the same trip, and each works for someone different. CMS’s manual for its own contractors lists the state offices that may share the work: the Medicaid agency and its fiscal agent, the fraud control unit, the attorney general, and offices such as a Medicaid inspector general or state comptroller (Medicaid Program Integrity Manual, chapter 2, revised December 23, 2025).

• The state program integrity unit or Medicaid inspector general. It audits providers, reviews claims before and after payment, and collects overpayments. It runs the state’s own audits of NEMT companies.
• The state’s recovery audit contractor. A private firm the state pays a share of what it recovers. See Medicaid RAC audit.
• A CMS Unified Program Integrity Contractor. A federal contractor that audits Medicaid providers with the state’s agreement. See UPIC audit.
• Health plans and brokers. State contracts must require Medicaid health plans to run a compliance program, verify by sampling that billed services were received, and report overpayments to the state within 30 days (42 CFR 438.608). A broker that holds a rides-only prepaid contract with the state (a NEMT PAHP) answers to a shorter federal list that leaves out 438.608 (42 CFR 438.9), so its state contract sets most of its audit duties. See NEMT broker audits.
• HHS OIG and the PERM review. Federal auditors test states’ NEMT payments and pull records from transportation companies to do it. See PERM audit and how to prepare for a Medicaid audit.
• The Medicaid Fraud Control Unit. A law enforcement office, not an auditor. See Medicaid Fraud Control Unit.

States with their own Medicaid inspector general

Most states run program integrity inside the Medicaid agency. Mississippi’s sits in the Division of Medicaid’s Office of Program Integrity, for example. Some states give the job to an inspector general or a watchdog office instead. These are six of them:

State	Office	How it was set up
New York	Office of the Medicaid Inspector General (OMIG)	Created in 2006 as an independent office inside the Department of Health
New Jersey	Medicaid Fraud Division	Part of the Office of the State Comptroller, which took over the Medicaid inspector general’s duties in 2010
Texas	HHS Office of Inspector General	Created by the Legislature in 2003 to strengthen the Health and Human Services Commission’s fight against fraud, waste, and abuse
Arkansas	Office of Medicaid Inspector General	Created by Act 1499 of 2013, now part of the Department of Inspector General
Utah	Office of Inspector General of Medicaid Services	Created by the Legislature in 2011 to oversee all state Medicaid spending
Illinois	Office of Inspector General	Inside the Department of Healthcare and Family Services, the Medicaid agency

When Arkansas created its office on July 1, 2013, the Department of Human Services’ program integrity unit and its staff moved under it. Its 2024 annual report, dated October 1, 2025, counts 572 audits and audit activities, 80 fraud investigations opened, $17,421,224.70 identified for recovery, and $7,411,596.74 recovered in calendar year 2024.

How program integrity differs from a fraud case

A program integrity review asks whether a claim was paid correctly. Its tools are civil and administrative: take the money back, hold payments, or end your enrollment. New York’s inspector general describes its powers that way and refers evidence of crimes to the attorney general.

A fraud case is different. The fraud control unit investigates and prosecutes, and the outcome can be criminal charges. The two connect: a program integrity office that finds signs of fraud must refer the case, and a credible allegation of fraud triggers a payment suspension (42 CFR 455.23). An honest billing error usually stays on the administrative side. It is repaid, appealed, or fixed.

What program integrity looks like in New York and Texas

New York. OMIG’s 2026 Work Plan says non-emergency transportation remains a focus because of its billings, federal oversight, and provider turnover. OMIG keeps auditing ambulette and taxi or livery companies under posted audit protocols. Both protocols, revised July 22, 2026, disallow any toll or parking charge above what was actually paid. For trips on or after August 25, 2023, a toll paid by mail is allowed only at the E-ZPass rate for that day. OMIG also checks transportation providers’ credentials, on site and remotely, working with the Department of Motor Vehicles, the Department of Transportation, the fraud control unit, and counties. It holds claims from providers with unusual billing for review before payment, and gives transportation enrollment applications a second review.

Its 2025 annual report puts numbers on that work:

• Nine transportation audits finalized, with more than $3.1 million in overpayments identified and more than $2.8 million recovered during the year.
• 323 transportation investigations completed and 74 transportation referrals, to the fraud control unit, federal prosecutors, a county district attorney, and the Department of Health.
• 63 education letters to 61 transportation providers on what they must do to stay in the program.
• $3,454,826 in savings from transportation claims denied for providers on prepayment review.

Texas. The HHS Office of Inspector General audits, inspects, and investigates across the state’s health and human services programs, Medicaid included, with about 600 staff. It reported $465,691,516 in recoveries for fiscal year 2025, 47 audit and inspection reports, and 270 referrals to the fraud control unit (The OIG in Brief, October 2025). Texas also moves fast on records: the provider manual of September 2026 lets the inspector general demand them at the time of the request, or within 24 hours. For a recent NEMT audit, see the Texas OIG NEMT audit.

What flags a NEMT company

New York’s 2025 annual report lists the common findings in its transportation work. Its audits found:

• No record that the ride happened.
• A missing or wrong pickup or drop-off time.
• A missing or wrong driver’s license or plate number on the claim.

Its investigations found drivers without the right license, vehicles not properly registered, soliciting riders, and false claims: rides never given, miles and tolls never driven or paid, and single trips billed when riders shared a van.

Data catches patterns that a single claim hides. OMIG’s analytics unit reported in 2025 that toll claims of $30 to $50 had dropped sharply while total tolls paid had climbed from recent lows, which it read as tolls being split into smaller amounts. Federal auditors look for a different gap: a ride billed on a day with no Medicaid-covered visit at the destination. HHS OIG’s Massachusetts audit, issued January 25, 2021, sampled 100 ride lines from days with no medical claim billed. In 48 the rider had no covered visit that day, and 86 of the 100 failed at least one requirement.

An example from dispatch

A rider has a standing order for dialysis three days a week. In March she spends a week in the hospital, nobody tells your dispatcher, and the trips stay on the schedule. Nobody marks them cancelled, so they go out with the week’s billing. New York then mails her an Explanation of Medical Benefits letter listing those rides. She describes the problem in the comment box and mails it back, and returned letters like hers were one source of the 249 transportation investigations OMIG opened in 2025.

The fix is in your process. Pause standing orders when a rider is admitted, require the driver to record real pickup and drop-off times on each leg, and compare billed trips with what dispatch shows actually ran before you submit. The trip documentation guide covers what each leg’s record needs.

What to do when a program integrity letter arrives

1. Read who sent it. A state audit, a recovery audit contractor, a CMS contractor, a broker, and a fraud unit each run on different rules.
2. Put the deadline on a calendar, counted from the date on the letter. It can be the same day in Texas or 30 days from a CMS contractor.
3. Stop all record deletion for the period, including GPS, dispatch, and phone logs.
4. Do not void, rebill, or correct claims in the review period without asking the reviewer first.
5. Send complete records by the deadline, and keep a copy and a list of what you sent.
6. Answer any draft findings in writing, claim by claim, before the deadline in the notice.
7. Look for the same error outside the review period and return what you owe within 60 days. See the 60-day overpayment rule.

The Medicaid audit guide walks through each stage of a state audit, and Medicaid recoupment covers what happens when money is taken back.