Industry News

OIG Issues Report on Strengthening CMS Oversight of RACs.

Jennifer Kirchner | September 2013

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report urging the Centers for Medicare & Medicaid (CMS) to strengthen oversight of Recovery Audit Contractors (RACs). For fiscal years 2010 and 2011, the OIG found that CMS took corrective actions against the $1.3 billion in improper payments identified by the RACs, but failed to evaluate the effectiveness of those corrective actions. The OIG also found that CMS did not take action to address six referrals of potential fraud received from RACs. Finally, the OIG found that CMS’ performance evaluations did not include metrics to evaluate RACs’ performance on all contract requirements.

The OIG recommends that CMS:

  1. Take action on vulnerabilities that are pending corrective action and evaluate the effectiveness of implemented corrective actions;
  2. Ensure that RACs refer all appropriate cases of potential fraud to CMS;
  3. Review and take appropriate, timely action on RAC referrals of potential fraud; and
  4. Develop additional performance evaluation metrics to improve RAC performance and ensure that RACs are evaluated on all contract requirements.

CMS concurred with the first, second, and fourth recommendations. While CMS did not indicate whether it concurred with the third recommendation, CMS noted that it has reviewed the six RAC referrals of potential fraud included in the OIG’s review.

The OIG report on strengthening CMS oversight of its RACs is available at:

Department of Health and Human Services Office of Inspector General. “Medicare Recovery Audit Contractors and CMS’s Actions to Address Improper Payments, Referrals of Potential Fraud, and Performance.” OEI-04-11-00680. 3 Sept. 2013.

About the Author

Jennifer Kirchner is a licensed attorney in Illinois and Wisconsin. Ms. Kirchner has expertise in assessing provider compliance with the Anti-Kickback Statute, Stark Law, the False Claims Act, HIPAA Privacy and Security Rules and clinical research laws and regulations.