CMS' failure to act on RAC findings has resulted in $231 million loss, GAO finds

CMS could have collected an additional $231 million in Medicare overpayments during the three-year Recovery Audit Contractor demonstration, had it taken steps to actually correct the "vulnerabilities" the program uncovered. But five years after the demonstration's launch, CMS has yet to implement corrective measures, let alone appoint someone to oversee the process, according to a new analysis by the Government Accountability Office.

Translation: Providers haven't even begun to feel the true impact of the dreaded RAC program.

True, CMS has taken steps to its resolve own "coordination issues" with the RACs, but has ignored 60 percent of the most significant issues uncovered by the RACs.

"CMS did not begin to evaluate the most significant vulnerabilities that resulted in improper payments until almost [two] years after the program began," the GAO found. Some of those vulnerabilities were among the lowest-hanging fruit the agency could have gone after, causing overpayments in excess of $1 million each, the GAO noted.

The GAO recommended that CMS take the following steps to remedy the situation:

  • Develop criteria to prioritize the activities of its various components and contractors to develop adequate measures to reduce future improper payments;
  • Identify and prevent future Medicare fee-for-service improper payments through direction from a high level within CMS; and
  • Assess the effectiveness of the corrective actions taken for reducing future improper payments.

Andrea Palm, HHS' acting assistant secretary for legislation, concurred with the GAO's recommendations, including that CMS appoint someone to oversee its corrective action process. But that appointment is out of the agency's hands, she hinted, noting that the CMS administrator would normally be responsible for implementing corrective actions. Problem is, CMS has been without a leader since September 2006, though President Obama recently nominated Donald Berwick, president and CEO of the Institute for Healthcare Improvement.  

For more information:
- read the GAO's report