Report: Overpayment Causes Not Addressed

Medicare and Medicaid audits identify vulnerabilities Howard Anderson (ismg_editor) • April 1, 2010

The Centers for Medicare & Medicaid Services needs to do a better job of addressing the apparent causes of overpayments as identified by an ongoing audit program, according to a new government report.

The report from the U.S. Government Accountability Office, made available March 31, assesses the Medicare Recovery Audit Contracting program, commonly known as RAC. Since March 2009, RAC auditors hired by CMS have been conducting audits of hospitals to look for improper payments. They've identified overpayment "vulnerabilities" that include claims for medically unnecessary procedures as well as duplicate claims submissions.

Recommended action

"GAO recommends that CMS improve its corrective action process by designating responsible personnel with authority to evaluate and promptly address RAC-identified vulnerabilities to reduce improper payments," the report recommends. "CMS agreed with GAO's recommendations," it notes.

The report points out that CMS has not yet implemented corrective action for 60 percent of the most significant RAC-identified vulnerabilities that were identified during a three-year RAC demonstration project that ended in March 2008. "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," according to the report.

Inadequate effort

Once the national RAC program was rolled out in 2009, the report notes, "CMS developed a process to compile identified vulnerabilities and recommend actions to prevent improper payments." But the report chastised this effort for lacking "certain essential procedures and staff with the authority to ensure that these vulnerabilities are resolved promptly and adequately to prevent further improper payments."

GAO also called on CMS to "develop criteria by which it prioritizes the activities of its various components and contractors to develop adequate measures to reduce future improper payments."