OIG blasts Medicare, RACs for weak oversight

The Office of Inspector General has been critical of Medicare oversight in previous reviews, and Tuesday's report is no different. This week, the OIG claimed the Centers for Medicare & Medicaid Services may not be catching all overpaid claims and therefore allowing high amounts of improper payments to persist, MedPage Today reported.

The report found problems with CMS' action--or inaction--regarding improper payment vulnerabilities and referrals for potential fraud, as well as with RAC performance evaluations.

Medicare recovery auditors (RACs) reviewed 2.6 million claims in fiscal years 2010 and 2011 and identified roughly half of the claims with improper payments totaling nearly $1.3 billion.

While CMS identified 46 vulnerabilities that resulted in improper payments, it only took corrective action to address 28 of them and failed to evaluate the effectiveness of these actions. The OIG pointed out that by not evaluating corrective actions CMS can't determine if they effectively reduce improper payments.

Moreover, by June 2012, CMS still had not taken corrective action on the remaining 18 vulnerabilities that totaled $31 million in improper payments.

The report also showed CMS received six referrals of potential fraud from RACs but had not addressed them as of last November.

CMS also failed to evaluate RACs' performance on all contract requirements. For example, the performance evaluations did not assess RACs' timeliness or documentation requirements for referring potential fraud to CMS.

The OIG called on CMS to evaluate the effectiveness of corrective actions, review and take appropriate action on fraud referrals, and develop additional evaluation metrics to improve RAC performance--recommendations to which CMS mostly agreed, accoding to the report summary.

Last month, an OIG audit found the ability of CMS to recover billions of dollars in Medicare overpayments is hampered by poor record-keeping, as well as turnover among the contractors responsible for collecting overpayments. What's more, the agency is stuck with $543 million in "not collectible" overpayments, FierceHealthcare previously reported.

For more:
- here's the OIG summary and report (.pdf)
- read the MedPage Today article