RAC claim reviews in the  national program involve the same processes of automated and complex  review of claims as during the demonstration project, and the Medicare  claims administration contractors are responsible for recoupments, claims  adjustments, and provider outreach and education. CMS Did Not Establish an Adequate Process to Address RAC-Identified Vulnerabilities That Led to Improper Payments; Corrective Actions Were Limited

CMS did not establish an adequate process during the demonstration  project or in planning for the national program to ensure prompt  resolution of the RAC-identified improper payment vulnerabilities. Although the agency’s goal was for the RACs to provide information to  CMS and Medicare claims administration contractors that could help  prevent future improper payments, CMS did not implement corrective  actions for 60 percent of the most significant vulnerabilities identified  during the RAC demonstration project. The IPPP listed the 58  most significant RAC-identified vulnerabilities—generally those that  resulted in overpayment collections of $1 million or more—and whether  any corrective actions were taken to address them. CMS’s Corrective Actions Did Not Address Most of the RAC-Identified Vulnerabilities That Led to Improper Payments

The lack of accountability and adequate processes for ensuring corrective  actions are taken have resulted in most of the RAC-identified  vulnerabilities that led to improper payments going unaddressed. Moreover, CMS officials and one of the RACs noted that many of  these vulnerabilities were known to CMS before the demonstration project  due to medical record reviews and the agency’s error reports. In addition, CMS reported that it  was also expanding the use of electronic data to more efficiently detect  improper payments and program vulnerabilities. CMS Is Taking Action to Resolve RAC and Medicare Claims Administration Contractor Coordination Issues

CMS used lessons learned from the RAC demonstration project to take  actions to resolve RAC and Medicare claims administration contractor  coordination issues for the RAC national program. CMS is taking multiple steps to resolve RAC and Medicare claims  administration contractor coordination issues in the national program  based on lessons learned during the demonstration project, such as  continuing the RAC and Medicare claims administration contractors  vulnerability calls, enhancing the existing data warehouse, automating the  claims-adjustment process, and developing a system for electronic  documentation sharing when RAC determinations are appealed. CMS Has Taken Steps to Improve Oversight of RAC Accuracy and Service to Providers

CMS took a number of steps to improve oversight of the accuracy of RACs’  claims review determinations and the quality of RAC service to providers  in the national program. Specifically, CMS added processes to review the  accuracy of RAC determinations and established Web site requirements to  address provider concerns about service. CMS Established Processes to Review the Accuracy of RAC Determinations and Required Additional RAC Medical Expertise to Enhance Program Accuracy

For the national program, CMS created processes to more closely review  the accuracy of RAC determinations to address provider concerns raised  during the demonstration project. CMS officials in  OFM have authority to allow the RACs to pursue clear-cut vulnerabilities  that can lead to improper payments, such as duplicate payments for the  same service. CMS required each RAC by January 1, 2010, to develop a tool on its Web  site that will allow providers to track the status of a claim. CMS Developed Performance Metrics to Monitor RAC Accuracy and Provider Service

CMS developed performance metrics to oversee RAC accuracy, service to  providers, and other aspects of performance. Neither  the IPPP developed during the demonstration project nor the current plan  for the national program provide for sufficient monitoring and control  activities to ensure that corrective actions are taken to help meet the  overall goal of reducing improper payments in the Medicare program. Appendix I: Selected Changes Made to the Medicare National Recovery Audit Contractors (RAC) Program

As a result of the RAC demonstration project, the Centers for Medicare &  Medicaid Services (CMS) included the following features in the RAC  national program:    RACs are to have a physician medical director.
Why GAO Did This Study

The Centers for Medicare & Medicaid Services (CMS) conducted a mandated 3-year project from March 2005 through March 2008 to demonstrate the use of recovery audit contractors (RAC) in identifying Medicare improper payments and recouping overpayments. CMS implemented a mandated national RAC program, which began in March 2009. GAO was asked to examine specific issues that arose during the demonstration project and CMS's efforts to address them in the national RAC program. This report examines the extent to which CMS (1) developed a process and took corrective actions to address vulnerabilities identified by the RACs that led to improper payments, (2) resolved coordination issues between the RACs and the Medicare claims administration contractors, and (3) established methods to oversee RAC claim review accuracy and provider service during the national program. GAO reviewed CMS documents and interviewed officials from CMS and contractors and provider groups affected by the demonstration project.

What GAO Found

CMS did not establish an adequate process in the 3-year demonstration project or in planning for the national program to address RAC-identified vulnerabilities that led to improper payments, such as paying duplicate claims for the same service. CMS stated that one purpose of the demonstration project was to obtain information to help prevent improper payments. However, CMS has not yet implemented corrective actions for 60 percent of the most significant RAC-identified vulnerabilities that led to improper payments, a situation that left 35 of 58 unaddressed. These were vulnerabilities for which RACs identified over $1 million in improper payments for medical services or $500,000 for durable medical equipment. CMS developed a spreadsheet, which listed the most significant improper payment vulnerabilities that were identified by the RACs during the demonstration project. However, the agency did not develop a plan to take corrective action or implement sufficient monitoring, oversight, and control activities to ensure these significant vulnerabilities were addressed. Thus, CMS did not address significant vulnerabilities representing $231 million in overpayments identified by the RACs during the demonstration project. For the RAC national program, CMS developed a process to compile identified vulnerabilities and recommend actions to prevent improper payments. However, this corrective action process lacks certain essential procedures and staff with the authority to ensure that these vulnerabilities are resolved promptly and adequately to prevent further improper payments. Based on lessons learned during the demonstration project, CMS took multiple steps in the national program to resolve coordination issues between the RACs and Medicare claims administration contractors. During the demonstration project, CMS learned that having regular communication with the claims administration contractors on improper payment vulnerabilities that the RACs were identifying was important. CMS also learned that the data warehouse used to store claims information for the RACs needed more capacity and utility, that manual claims adjustment by claims administration contractors to recoup improper payments was burdensome, and that sharing paper copies of medical records between RACs and claims administration contractors when claims denials were appealed was difficult to manage. As a result, CMS took steps to resolve these coordination issues in the national program, such as enhancing the existing data warehouse and automating the claims-adjustment process. CMS took steps to improve oversight of the accuracy of RACs' claims reviews and the quality of their service to providers for the national program. CMS added processes to review the accuracy of RAC determinations, including independent reviews by another CMS contractor. CMS also established requirements to address provider concerns about service, such as having the RACs establish Web sites that will allow providers to track the status of a claim being reviewed. In addition, CMS established performance metrics that the agency will use to monitor RAC accuracy and service to providers.