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RACs Reporting Potential Cases of Fraud

February 22, 2010: In a report released last week, CMS revealed that Recovery Audit Contractors (RACs) referred two cases of potential fraud to the Department of Health and Human Services Office of Inspector General (OIG) during the RAC Demonstration Program between March 2005 and March 2008.

The published report states that fraud detection was not a part of the scope of work for demonstration RACs. However, RACs were to report claims that they determined to be potentially fraudulent to the CMS Project Officer. The CMS Project Officer had the responsibility to send the referrals to the Program Integrity Group at CMS to determine if the referral should be sent to the PSC and/or law enforcement.

The two cases of potential fraud referred by RACs to CMS during the demonstration project were sent by one RAC. The RAC reported the potential fraud to the CMS Project Officer. According to the RAC’s report to CMS, it did not have contact with the providers with regards to the potential fraud and completed its review of the providers.

Another RAC reported that it notified CMS of claims involving millions of dollars in improper payments. In this situation, CMS directed the RAC to cease its review of the claims. CMS then referred the claims to the PSC and/or law enforcement.

During the Demonstration Program CMS did not provide formal training to the RACs regarding the identification of Medicare fraud. However, CMS has revealed that in the permanent program it plans to educate and train RACs on the identification and referral of potential fraud.

In its report the OIG supported this training and recommended that CMS provide permanent RACs with mandatory training on identification of potential fraud, and to develop guidelines for RACs to assist when determining whether to report cases of potential fraud.

Click here read the report in its entirety.

For more information visit our RAC website at, or contact one of our RAC attorneys at 248-544-0888.

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