Over the last 2 weeks, I have received a number of inquiries about the Medicare Recovery Audit Contractor (RAC) Program with an apparent common theme or assumption. That is, the sole purpose of the Medicare RAC program is to identify Medicare fraud.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 directed the Department of Health and Human Services (HHS) to conduct a 3-year demonstration project using RACs.
The purpose of the demonstration was to determine whether RACs would be a cost-effective means of identifying Medicare underpayment and overpayments and recovering the overpayments.
Congress made the RAC program permanent when it enacted the Tax Relief and Health Care Act of 2006 (TRHCA). In fact, the TRHCA directs HHS to expand the RAC program to all 50 states by January 1, 2010.
The Centers for Medicare & Medicaid Services (CMS) has contracted with various private entities to accomplish that objective. The final Statement of Work (SOW) associated with such engagements charges the RACs with identifying Medicare underpayments and overpayments and correcting improper payments.
Not all Medicare improper payments involve fraud. Further, there is no indication in the SOW or CMS documentation that the purpose or focus of the RAC program is to identify instances of Medicare fraud.
However, the SOW does instruct RACs to report instances of potential fraud to CMS. In addition, the HHS Office of Inspector General's (OIG) 2010 Work Plan indicates that the OIG will review CMS's oversight of the RACs during the 3-year demonstration to determine the extent to which the RACs identified and reported potential fraud and abuse to CMS. In fact, for both the demonstration and permanent RAC program, the OIG intends to examine:
- The number of cases referred to CMS;
- CMS's processing of those referrals;
- CMS's guidance and training to demonstration RACs to identify and report potential fraud; and
- CMS's guidance and training to national RACs on appropriately reporting potential fraud.
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