By Jennifer Lubell

The CMS needs to do a better job of addressing and promptly correcting service-specific errors that result in improper payments under its Recovery Audit Contractor program, the Government Accountability Office recommended in a new report.

The RAC program allows third-party auditors hired by the CMS to keep 9% to 12.5% of provider payments they identify as improper. The program was pilot-tested in several states from March 2005 to March 2008, recouping more than $992 million in overpayments to providers. The CMS’ goal is to have a permanent program operating in all 50 states this year, with four contractors each having jurisdiction for one-quarter of the country.

What was missing from the demonstration project and in the planning for the national program was an adequate process for taking corrective action or sufficiently monitoring or controlling these types of errors or “vulnerabilities,” the GAO stated.

Specifically, the agency has yet to implement corrective actions for 60% of the most significant RAC-identified vulnerabilities that led to improper payments during its demonstration project, “a situation that left 35 of 58 (of these vulnerabilities) unaddressed,” the report found.

Based on what it learned from the demonstration project, the agency did take steps to resolve coordination issues between RACs and Medicare claims administration contractors. As explained in the report, it was the responsibility of the claims administration contractor to take corrective action once a RAC identified an error.

The watchdog agency recommended that the CMS improve its corrective action process by appointing responsible personnel to evaluate and swiftly address these service-specific errors. The CMS agreed with the GAO’s recommendations.

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