Last week, CMS and the Government Accountability Office (GAO) published two reports concerning Medicare contractor developments.   In the Medicare Fee for Service National Recovery Audit Program Quarterly Newsletter, CMS reported that, during the second quarter of Fiscal Year (FY) 2014, the Recovery Audit Contractor (RAC) program collected $665 million in overpayments.  This represents a decline over previous quarters, which RAC proponents attribute to the suspension of the RAC program.  Almost half of the overpayment collections ($322.5 million) from the second quarter were attributable to Connolly, the Region C RAC.  For all four regions, the top RAC issues involved medical necessity.  Here is a breakdown of the top issues per region for the second quarter of FY 2014:

• Regions A, B, and C – Medical necessity for cardiovascular procedures.
• Region D – Medical necessity for minor surgery and other treatments billed as inpatient.

Additionally, on April 30, 2014, GAO released Director Kathleen M. King’s testimony to the Subcommittee on Health, Committee on Ways and Means, House of Representatives.  Highlights from the testimony include:

• GAO found that CMS could improve contractor oversight.  GAO is reviewing, among other things, whether CMS has a strategy for coordinating contractors’ post-payment claims review activities.
• Reflecting a move from the “pay and chase” model, Ms. King’s testimony focused on current and potential prepayment review efforts.
• CMS has stated it anticipates awarding all five of the new Medicare Fee-For-Service RAC contracts by the end of summer 2014.  Additionally, CMS plans to award the Part C RAC contract by the end of 2014.
• GAO is concerned about CMS’s oversight of Part D fraud, waste and abuse, and is examining prescription drug program integrity efforts.
• CMS has not established the core elements of compliance programs for providers and suppliers, as required by health care reform.

Reporter, Isabella Edmundson, Atlanta, +1 404 572 3527, iedmundson@kslaw.com.