Medicare Part D: Changes Needed to Improve CMS's Recovery Audit Program Operations and Contractor Oversight
Highlights
What GAO Found
The Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) implemented the Part D recovery audit contractor (RAC) program in January 2011 by undertaking various activities, including establishing a statement of objectives and conducting a solicitation process to select a RAC to identify improper payments. However, 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. Consistent with federal contracting requirements, agencies should clearly define requirements for services. As a result of CMS's challenges in setting expectations and establishing realistic timelines as it implemented the RAC program, the RAC did not have a clear understanding about the work it should perform, and CMS recovered improper payments for Part D more than a year after it had projected.
As of May 2015, CMS had not completed any annual evaluations of the Part D RAC, but an initial evaluation of the RAC's contract year 2014 performance was in progress, and the agency had conducted other oversight of the RAC's performance. Federal internal controls and contracting standards and GAO's prior work contain requirements and suggestions for conducting regular performance evaluations and developing performance measures. In March 2015, CMS officials acknowledged that the agency should have completed annual evaluations and noted that CMS has been behind schedule in conducting evaluations of some its contractors, including the RAC. In May 2015, CMS officials finished the initial evaluation of the RAC's 2014 performance and provided the evaluation to the RAC for review and comment. 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. While CMS has not completed annual evaluations, it has established quality assurance procedures to conduct oversight of the RAC. For example, CMS uses a separate contractor to review and validate 100 percent of the RAC's audit findings, in part because of concerns about the quality of the RAC's work.
As of May 2015, CMS had collected less than $10 million in improper payments, and had not approved the RAC to perform new audit work since March 2014. Both CMS and the RAC are charged with reducing Medicare Part D improper payments, and federal 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 and has collected a limited amount of improper payments relative to the estimated $1.9 billion in improper payments in Part D in 2014. With a more effective and efficient process for identifying, reviewing, and approving appropriate new audit work, more audit work would likely have been approved each year of the RAC contract, resulting in more improper payments being identified and collected.
Why GAO Did This Study
In 2014, the federal government spent $58 billion on Medicare Part D, the voluntary, outpatient prescription drug coverage program. An estimated $1.9 billion of this total was improper payments--including overpayments or underpayments that may be due to errors, such as the submission of duplicate claims for the same service. In January 2011, CMS began a RAC program in Part D that was intended in part to identify and recoup improper payments, as required under the Patient Protection and Affordable Care Act. The RAC is paid a contingency fee from amounts recovered.
GAO was asked to review CMS's Part D RAC program implementation, oversight, and results. GAO examined (1) how CMS has implemented the Part D RAC program and any challenges it faced during implementation; (2) the extent to which CMS has overseen the RAC's audit activities; and (3) the results of the RAC's work to date and any challenges CMS and the RAC faced in identifying and collecting improper payments. To do this, GAO analyzed the RAC contract and audit documents, and federal statutes and regulations on Part D and federal contracting. GAO also interviewed CMS and RAC officials.
Recommendations
As CMS prepares to solicit the next RAC contract(s), CMS should set clear expectations in contract work statements, conduct annual RAC performance evaluations, and review the process for developing new audit issues. HHS concurred with GAO's recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Centers for Medicare & Medicaid Services |
Priority Rec.
As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should ensure that work statements included in solicitations for contract proposals and the executed contract(s) set clear expectations about the work CMS intends the RAC to perform and that time frames are established that reflect the time needed to reach milestones. |
Closed – Implemented
In August 2018, CMS officials reported that while the agency was still exploring a Medicare Part D RAC program as part of its Part D program integrity effort, CMS's National Benefit Integrity (NBI) Medicare Drug Integrity Contractor (MEDIC) was currently conducting Medicare Part D audit work. The NBI MEDIC identifies and investigates potential fraud, waste, and abuse in Medicare Part D, and according to CMS officials, while the NBI MEDIC generally is oriented toward addressing potential fraud, the NBI MEDIC can also examine inappropriate payments, which is the intended responsibility of a Part D RAC. The NBI MEDIC statement of work includes a task for data and investigative analysis. Specifically, the statement of work indicates that the NBI MEDIC is to generate more proactive data analysis projects, to further increase payment recoveries, and to address issues, such as abusive prescribing and patient harm. CMS officials said that in fiscal year 2018, the NBI MEDIC conducted 12 self-audits, during which Medicare Part D plans review their own Part D prescription drug events to ensure that they meet Medicare payment policy and submit the results to CMS for approval. For example, a Medicare Part D plan conducted a self-audit on payments made for Hepatitis C, immunosuppressive, and cancer pain treatment drugs. As part of overseeing the self-audit, CMS provides the Medicare Part D plan with a timeline for the estimated dates each step in the self-audit process that is to be completed, including CMS reviewing the Part D plan's self-audit results.
|
| Centers for Medicare & Medicaid Services |
Priority Rec.
As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should conduct annual evaluations of the RAC's performance against measurable performance standards to provide a clear basis on which CMS and the RAC can assess RAC performance in identifying improper payments. |
Closed – Implemented
In August 2018, CMS officials reported that the NBI MEDIC contractor is conducting the audit work intended for the Medicare Part D RAC and that CMS is evaluating the NBI MEDIC annually, including the NBI MEDIC's work intended for the RAC. CMS recently completed its annual evaluation of the NBI MEDIC's performance from September 2016 to September 2017. CMS assessed the NBI MEDIC's work on 2 completed self-audits and 10 in-process self-audits, against measurable performance standards, and found that the NBI MEDIC performed the data analysis in accordance with CMS requirements.
|
| Centers for Medicare & Medicaid Services |
Priority Rec.
As CMS prepares to solicit the next RAC contract(s), to improve the agency's RAC program operations and contractor oversight, the Administrator of CMS should review the agency's process for identifying, reviewing, and approving new audit issues to identify process improvements that will help ensure the efficient development of appropriate audit issues (i.e., reduce audit issue denials and increase audit issue approvals) and thereby maximize the collection of improper payments. |
Closed – Implemented
In August 2018, CMS officials reported that CMS's NBI MEDIC is currently conducting Medicare Part D audit work and that in fiscal year 2018, there had been 12 self-audits-a process under which Medicare Part D plans review their own Part D prescription drug events to ensure that they meet Medicare payment policy and submit the results to CMS for approval. CMS officials explained that both the agency and the NBI MEDIC may suggest self-audit projects. CMS officials explained that CMS's Center for Program Integrity and Center for Medicare then work together to ensure that the structure of the self-audit is consistent with Medicare policy and that the self-audit instructions to the Part D plan are clear. CMS officials said that the self-audit selection process is based on using Medicare Part D drug data to identify a Medicare Part D plan's risk for potential improper payments while taking into account other factors that may burden the plan, such as participation in other audits concurrently.
|