Policy & Regulation News

GAO Advises CMS to Clarify RAC’s Medicare Audit Objectives

By Sara Heath

A recent study by the Government Accountability Office (GAO) has found that the Centers for Medicare & Medicaid Services (CMS) needs to be more hands-on when working with Medicare Part D recovery audit contractor (RAC) programs.

CMS began the RAC program in January 2011 as a means to identify improper Medicare Part D -- the voluntary subset of Medicare that includes outpatient and prescription drug services -- payments that could be costing the government several millions of dollars. The initiative was reportedly supposed to begin with several outlined expectations from CMS. However, there were complications with that process.

“CMS’s challenges in setting expectations about the work the Part D RAC would conduct and establishing the length of time required for CMS and the RAC to reach project milestones hampered Part D RAC program implementation,” GAO explained.

These challenges reportedly caused RAC programs to fail at accomplishing their objectives and caused CMS to receive reports on improper payments at a severely delayed rate. It took approximately one year following the projected timeline for CMS to receive those improper payment reports.

The GAO report also found that the RAC has not received regular annual quality assessment reports. These quality assessments are stipulated in the agreement between the RAC and CMS, but have not been carried out because CMS is reportedly behind on issuing these reports to several of its contractors, including the RAC. However, these assessments are critical in executing the success of the RAC and identifying RAC objectives.

“An annual performance evaluation would provide CMS with a clear basis for assessing RAC performance in identifying improper payments and provide the RAC with targets against which the RAC could compare its performance,” GAO wrote.

Although CMS has not implemented regular annual assessments, it has created quality control protocol, according to GAO. These protocols include using an outside contractor to confirm all of RAC’s findings.

The GAO report also states that CMS has received far less money in improper payments than anticipated when the program began in 2011. As of May 2015, the GAO reports the agency has received less than $10 million. This is because the RAC cannot be approved for more audit work due to the lack of objectives established between the RAC and CMS.

“[F]ederal internal control standards call for agencies to have effective and efficient processes to meet agency goals. However, as a result of CMS’s and the RAC’s challenges in determining audit work to conduct and the RAC’s challenges in developing audit methodologies, CMS has approved 1 of the 15 audit proposals from the RAC since the beginning of the contract in 2011,” GAO wrote.

In response to these findings, GAO poses three recommendations to CMS. First, GAO states that CMS should ensure that the next RAC contract clearly outline expectations and objectives. This should be done by an administrator of CMS while the agency is still soliciting the RAC. GAO also suggests CMS establish a clear timetable for the benchmarks the RAC is expected to meet.

The second recommendation states that CMS should maintain regular quality assessments of the RAC, and to include this as a part of CMS’s contract with the RAC.

The final recommendation states that CMS should pay more careful attention to assessing various RAC audit methodologies. By using new and improved methodologies, CMS could yield more favorable results and recover more of its improper payments.