Skip Navigation
United States Flag

An official website of the United States government. Here's how you know >

A New Look for HHS-OIG. Learn More >>

Change Font Size

Transcript for audio podcast on the following report: Recovery Audit Contractors and Improper Payments

From the Office of Inspector General of Department of Health and Human Services

[Jaime Durley:] I'm Jaime Durley, Deputy Regional Inspector General for the Office of Evaluation and Inspections. I'm speaking with David Samchok, a program analyst in our office, about a report on Medicare Recovery Audit Contractors and Improper Payments. David, could you tell us about these contractors, and the Centers for Medicare & Medicaid Services', or CMS's, work with these contractors?

[David Samchok:] Sure. Recovery Audit Contractors, or RACs, main responsibility is reviewing Medicare claims that have already been paid, and identifying instances where the provider was paid too much or too little. These are called improper payments. The RACs are paid based on a percentage of improper payments they identify.

[Jaime Durley:] So David, do RACs have any other roles besides identifying improper payments?

[David Samchok:] They do. RACs are also required to refer any potential fraud they find to CMS, but it's not a primary responsibility.

[Jaime Durley:] So what exactly does CMS do when RACs identify improper payments and fraud referrals?

[David Samchok]: CMS takes a variety of action on improper payment vulnerabilities. It also reviews and forwards fraud referrals to the appropriate people, like CMS fraud contractors.

[Jaime Durley]: How does CMS oversee RACs?

[David Samchok]: It evaluates RAC performance every year. CMS provides feedback to the RACs and addresses any performance issues.

[Jaime Durley:] Great. So what was the focus of this report?

[David Samchok]: Well, we looked at Medicare Part A and B RAC's performance and how CMS addressed their performance in fiscal years 2010 and 2011. We looked at RAC's identification of improper payments, whether CMS addressed vulnerabilities and potential fraud identified by RACs, and finally, CMS's oversight of RAC performance evaluations.

[Jaime Durley:] Why did you decide to focus on RACs for this report?

[David Samchok:] Well, OIG has been concerned about CMS oversight of its contractors for some time now. And, past Government Accountability Office and OIG studies identified issues with CMS's ability to address RAC vulnerabilities and potential fraud referrals.

[Jaime Durley:] Ok. So what exactly did you find?

[David Samchok:] Well, we found that in fiscal years 2010 and 2011, RACs identified over 1 billion dollars in improper payments from nearly half of the claims they reviewed. Inpatient hospitals and physician and other medical practitioners, like nurses, accounted for 93 percent of these improper payments.

[Jaime Durley:] In what other areas did the RACs find improper payments?

[David Samchok:] They come from many sources, including almost $3 million dollars paid for services billed on behalf of dead Medicare patients, believe it or not.

[Jaime Durley:] Wow. What about CMS's role in identifying vulnerabilities during this two year period?

[David Samchok:] CMS took action to address most of the vulnerabilities identified; but, CMS did not evaluate the effectiveness of these actions.

[Jaime Durley:] What about RAC potential fraud referrals and performance?

[David Samchok:] RACs made 6 fraud referrals to CMS during our timeframe. However, by November 2012, CMS had not addressed the 6 referrals. As for RAC performance, CMS did not include metrics to evaluate performance on all contract requirements, like identifying improper payments.

[Jaime Durley:] David, CMS is ultimately responsible for the RAC program. What did OIG recommend to CMS to improve the program?

[David Samchok:] We recommended four things to CMS. First, take action on remaining vulnerabilities and determine the effectiveness of those actions. Second, ensure that RACs refer all appropriate cases of potential fraud. Third, review and take timely action on potential fraud referrals. Finally, develop additional performance metrics that ensure RACs are evaluated on things such as identifying improper payments and fraud referrals.

[Jaime Durley:] What's been CMS's response to this report?

[David Samchok:] CMS agreed with three of our four recommendations and said it's already taken action on the fourth one about addressing potential fraud referrals.

[Jaime Durley:] David Samchok, a program analyst for the Office of Evaluation and Inspections, thank you so much for sharing this important work.

[David Samchok:] Thank you.


Return to Podcasts

Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201