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OIG releases new report on RAC program and improper payments

On September 3, the Office of Inspector General (OIG) released a report titled, “Medicare Recovery Audit Contractors and CMS’s Actions To Address Improper Payments, Referrals of Potential Fraud, and Performance.”

The report found that in 2010 and 2011, Recovery Audit Contractors (RAC) identified half of all claims they reviewed as having resulted in improper payments totaling $1.3 billion. CMS took corrective actions to address the majority of vulnerabilities it identified in 2010 and 2011; however, it did not evaluate the effectiveness of these actions.

As a result, high amounts of improper payments may continue. Additionally, CMS did not take action to address the six referrals of potential fraud that it received from RACs. Finally, CMS’s performance evaluations did not include metrics to evaluate RACs’ performance on all contract requirements.

The OIG recommends that CMS:

  1. Take action, as appropriate, on vulnerabilities that are pending corrective action and evaluate the effectiveness of implemented corrective actions
  2. Ensure that RACs refer all appropriate cases of potential fraud
  3. Review and take appropriate, timely action on RAC referrals of potential fraud
  4. Develop additional performance evaluation metrics to improve RAC performance and ensure that RACs are evaluated on all contract requirements.

According to the OIG, CMS concurred with the first, second, and fourth recommendations. CMS did not indicate whether it concurred with the third recommendation, but noted that it has reviewed the six RAC referrals of potential fraud in our review.

Read the report in full here.