GAO Testimony Recommends Stronger Contractor Oversight to Prevent Medicare Fraud, Abuse, and Waste

(June 23, 2010): In her June 15, 2010 testimony before Congress, GAO Health Care Director Kathleen M. King made clear that the Centers for Medicare & Medicaid Services (CMS) continue to face substantial challenges to preventing Medicare and Medicaid fraud, waste, and abuse.  Among the most significant of these challenges is lack of adequate oversight of the myriad contractors CMS relies on to process, pay, and audit the millions of daily Medicare claims.

King raised specific concerns about the national recovery audit contracting program’s failure to provide adequate post-payment review of large categories of claims.  Recall that recovery audit contractors (RACs) are private bounty hunters. 

“Because RACs are paid on a contingent fee based on the dollar value of the improper payments identified, during the demonstration RACs focused on claims from inpatient hospital stays, which are generally more costly services.” 

Therefore, GAO recommends that CMS direct othercontractors to focus on items and services known to have high levels of improper payments, such as home health and durable medical equipment.   What was it that RACs were supposed to be doing again?  Recall too that experience has shown that both ZPICs and PSCs do not necessarily strictly adhere to medical review standards established by CMS.  Instead, we have seen these contractors apply their own unwritten standards, often denying claims based on conjecture and speculation.

Finally, King’s testimony suggests that the RAC program alone does not resolve known improper payment vulnerabilities.  Where RACs have identified vulnerabilities, CMS still lacks policies and procedures to ensure that it “promptly (1) evaluates findings of RAC audits, (2) decides on the appropriate response and a time frame for taking action based on established criteria, and (3) acts to correct the vulnerabilities identified.”  GAO’s recommendations in this respect seem to fall under the category of “This isn’t happening now?” 

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