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Updated on: June 22, 2012

CMS Heat is on – Hence the RAC Attack

Original story posted on: August 30, 2011

VAxsom-Brown100As CMS's 2011 fiscal year is nearing its end (Sept. 30, 2011), Recovery Audit Contractors (RAC) are hard at work trying to identify at least $307.5 million in overpayments to meet their overall goal for the year.


With the 2012 CMS RAC budget increase of $241 million on top of the 2011 total of $259 million (a 93 percent jump), one might expect the broader $900 million improper payment goal to rise accordingly, producing a 2012 goal of nearly $1.7 billion - and that may be achievable given CMS's mission, vision and plans 2012 and beyond.


CMS during the 2012 fiscal year will continue to emphasize critical performance measures affecting all providers, regardless of type (hospital, physician, ambulatory service, home health, hospice, SNF, etc.). While the 2011 fiscal year is ending, the 2012 fiscal year and $506.7 billion budget is just beginning.


The CMS mission for 2011 is defined by the agency envisioning itself as "a major force and trustworthy partner for the continual improvement of health and healthcare for all Americans."(1) The agency's 2012 mission is "to ensure effective, up-to-date healthcare coverage and to promote quality care for its beneficiaries"(2).


In 2011, CMS reported envisioning "a transformed and modernized healthcare system for America that promotes efficiency and accountability, aligns incentives toward quality and encourages shared responsibility."


"We will make CMS an active purchaser of high-quality, efficient care; make sure that those who provide healthcare services are paid the right amount at the right time; work toward a high-value healthcare system where providers are paid for giving quality care; increase consumer confidence by giving them more information; strengthen our workforce to manage and implement our program; and continue to develop collaborative partnerships with our stakeholders," the vision statement read."(3)


CMS started reporting performance targets and results as early as 2005. The agency's performance reports and goals for 2008-2010 are posted on the CMS website.(4) The summary information below shows the reported results through 2011. What impact are CMS performance targets having on your organization?


Fiscal Year

Total Targets

Targets with Results Reptd

Percent of Targets with Reptd Results

Total Targets Met

Percent of Targets Met


















































There are at least nine key areas, each with a specific title, in which CMS has a major focus. Some involve the RACs, and others involve other auditing or credentialing organizations. These nine areas include:


1.   Medicare Operations, the title of which is being changed to Program Operations in 2012.  This includes the MACs, IT infrastructure and operational support needed to run programs such as Medicare Advantage and prescription drug programs (or to meet legislative mandates and other directives). RACs will be involved in this arena as they coordinate findings and reports for MACs' administration and collection.


2.   Federal Administration is involved with CMS employees' salaries and expenses associated with large organizations: costs such as rent, leases, buildings, supplies, etc. No RAC involvement here.


3.   Survey and Certifications involves state surveyors paid to inspect healthcare facilities to ensure that federal standards for health, safety and quality are met. RACs may use reported information to focus their audits and service evaluations for improper payments more precisely.


4.   Research, Demonstration and Evaluation supports a variety of research projects, demonstrations and evaluations designed to improve the quality of healthcare furnished to Medicare and Medicaid beneficiaries, and to slow the cost of healthcare spending. No RAC involvement at this time.




(1) https://www.cms.gov/PerformanceBudget/Downloads/CMSFY11CJ.pdf

(2) https://www.cms.gov/PerformanceBudget/Downloads/CMSFY12CJ.pdf

(3) https://www.cms.gov/PerformanceBudget/Downloads/CMSFY11CJ.pdf

(4) https://www.cms.gov/PerformanceBudget/Downloads/cmsannualperformancereportfy2008.pdf, FY 2008 Annual Performance Report




5.   Health Care Data Improvement Initiatives is a new, multi-year area of focus that will create a data-centric environment to support modernization of Medicare and Medicaid programs, value-based purchasing and comparative effectiveness research. Electronic medical records and the use of electronic data submission through esMD pilot (Electronic Submission of Medical Documentation) are wonderful tools with serious potential data tracking and monitoring value. Expect RACs to play an indirect role in this area given their data-mining activities and CMS suggestions that such activities can enrich data quality and recording and/or reporting accuracy.


6.   Health Care Fraud & Abuse Control involves referrals that may be generated by the RACs and other CMS contractors.


7.   Recovery Audit Contractors have a specific program category. Expect them to continue to find ways to work smarter and become more efficient and proficient in their identification of improper payments. Remember that the 2011 vision was not replaced in 2012, so expect more actions and deliveries rendered in accordance with the continuing CMS vision for Medicare and Medicaid beneficiaries and providers. With the three-year lookback period and the increase in medical record requests for some providers, the RACs only are going to get more assertive with their audits. The time spent on more focused SNF, hospice, home health care, ambulatory care, laboratory, DME, ambulance and other "occasional" audits (depending on RAC region) will increase. As RACs expand their joint audit query developments, more consistency in audit activities will be noticeable.


8.   Grants to States for Medicaid is an area supporting the refinement of the Medicaid programs in accordance with Medicaid's and Medicare's past, present and future findings. New Medicaid RACs are forming and initiating audit activities.


9.   Payments to the Medicare Health Care Trust Fund is an area receiving increased attention, and with that increase comes the need to reduce overall costs and increase efficiency and quality of healthcare delivery. The RACs play a major role in the returning of fund monies; however they are not the only ones contributing.


The heat from CMS is definitely on the RACs, who in turn will become even more aggressive in the months ahead.


About the Author


Vickie Axsom-Brown is the president of Audits and Recovery Solutions. She is a 20-year managed care veteran with diverse experience in administering private, state and federal healthcare services.  Her management experience includes time spent as the vice president of Region D RAC services (as the principal lead for CMS, claims processing contractors and HDI services) and as CEO/COO of multidisciplinary, multi-site adult and pediatric medical/surgical providers, including oncology/radiology services, laboratory services, ambulatory surgery centers, upright MRIs, PETs, and others.


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