Medicare Audits: Is There an Unintended Aspect to RAC Behavior That May Benefit Some Providers? Are RACs Looking the Other Way When They Run Across Evidence of Fraud?

(March 13, 2010): When debating the the fundamental unfairness of the RAC program — one interesting point was heavily discussed.  As recently reported, CMS is now “training” RACs to identify and report evidence of fraud that may be identified as they conduct medical reviews.   The government’s recent interest in making sure that they properly trained likely stems from the fact that they reported a mere handful of possible fraud case to the government, despite the fact that the program is far from new at this point.  The reason for their hesitation is clear — it’s either a mere overpayment (and they can keep part of the recovery) or it’s something more serious, possibly requiring referral to HHS-OIG or DOJ.  Keep in mind, RACs are a private enterprise seeking to make money.  While no one is questioning that they mean well and want to be good corporate citizens, the fact remains that a fraud referral very well may mean that they don’t recovery for an otherwise good case.  In the RAC context, the term “improper payments” does not mean fraud. Honest billing errors, poor documentation, or even the lack of a doctor’s signature on a visit note could prompt Medicare or a RAC to claim that a provider had been overpaid and to demand reimbursement. Providers accused of fraud, by contrast, are suspected of intentionally overbilling the government. If convicted, they not only have to return the money but could be subject to jail time for the worst offenses.

RACs are supposed to alert the appropriate authorities when they encounter fraud. However, RACs have no incentive to do so.  Remember RACs are bounty hunters.  RACs do not get paid for telling the government that they have uncovered fraud.  Think about this, because Medicare prohibits RACs to continue reviewing billings from a provider suspected of fraud, the RAC can actually lose money by making fraud allegations.

Naturally, RACs referred only two cases of suspected Medicare fraud during from 2005 to 2008.  Although a new report from the Department of Health and Human Services indicates that RACs are being trained on fraud detection and where to refer fraud cases, the financial deterrent is still there.

Just a thought . . .

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