Obama Calls for Expansion of Repayment Audits - March 17, 2010

On March 10, President Obama issued a memorandum to heads of executive departments and agencies, calling for an expansion of “payment recapture audits” to all parts of the federal government. Payment recapture audits have been used in Medicare since 2005 through a pilot program known as the Recovery Audit Contractor (RAC) program. Under RAC, private contractors look for overpayments or underpayments to providers based on error, fraud, waste, and abuse, and receive a portion of that overpayment or underpayment as compensation. Between 2005 and 2008, the RAC program recovered nearly $1 billion. A permanent RAC was rolled out to all 50 states last year. A similar Medicaid Integrity Program was authorized under the Deficit Reduction Act, and CMS has hinted it may expand the RAC program to Medicaid. The Senate's proposed health reform bill would mandate such an expansion to Medicaid. President Obama intends to implement similar programs government-wide, which the White House estimates will lead to a combined savings of $2 billion over three years.