BALTIMORE--On Oct. 6, CMS unveiled a host of “aggressive new steps” to prevent fraud and abuse, including the launch of a national recovery audit contractor (RAC) program.

The agency has named four permanent RACs--to be paid on a contingency fee basis on both the overpayments and underpayments they find--that will be responsible for conducting post-payment reviews of Part A and Part B claims. According to a CMS release, a three-year RAC demonstration in six states (California, Florida, New York, Massachusetts, South Carolina and Arizona) collected over $900 million in overpayments and found $38 million in underpayments.

The new RACs are:

--Region A: Diversified Collection Services of Livermore, Calif., initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York;

--Region B: CGI Technologies and Solutions of Fairfaix, Va., initially working in Michigan, Indiana and Minnesota;

--Region C: Connolly Consulting Assoc. of Wilton, Conn., initially working in South Carolina, Florida, Colorado and New Mexico; and

--Region D: HealthDataInsights of Las Vegas, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.

While work in the first phase of the program will start with these states, additional states will be added to each RAC region in 2009.

The RACs will begin outreach this month and in November, holding what CMS described as “town hall-type meetings” with providers in each state. To prepare for the program, CMS advised providers to “consider conducting an internal assessment to ensure that submitted claims meet the Medicare rules.”

In addition to the RAC program, CMS also said it is working more closely with beneficiaries and providers, consolidating its fraud detection efforts and strengthening oversight of home medical equipment suppliers and home health agencies.

CMS’ new program integrity contractors will look at billing trends and patterns across Medicare, focusing on companies and individuals whose billings are higher than the majority of providers. (See related story "CMS Reveals Edits Used to ID Part B Claims Errors" in this issue.)

“CMS is also shifting its traditional approach to fighting fraud by working directly with beneficiaries by ensuring they received the durable medical equipment or home health services for which Medicare was billed and that the items or services were medically necessary,” the agency said.

In particular, CMS is targeting Medicare payment to HHAs and HME providers in seven states: Florida, California, Texas, Illinois, Michigan, North Carolina and New York. In these states, the agency will:

--Conduct more stringent reviews of new DMEPOS suppliers’ applications, including background checks to ensure that a principal, owner or managing owner has not been suspended by Medicare;

--Make unannounced site visits to double check that suppliers and home health agencies are actually in business;

--Implement extensive pre- and post-payment review of claims submitted by suppliers, home health agencies and ordering or referring physicians;

--Validate claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians;

--Verify the relationship between physicians who order a large volume of DMEPOS equipment or supplies or home health visits and the beneficiaries for whom they ordered these services;

--Identify and visit high-risk beneficiaries to ensure they are appropriately receiving the items and services for which Medicare is being billed.

The additional reviews will be focused on DMEPOS equipment and supplies with high expenditures, such as oxygen equipment and supplies, power wheelchairs and scooters and diabetic test strips, the agency said.

Finally, CMS is consolidating the work of its program safeguard contractors (PSCs) and Medicare Drug Integrity Contractors (MEDICs) with new Zone Program Integrity Contractors (ZPICs). Eventually, the agency said, these new contractors will be responsible for ensuring the integrity of all Medicare claims under Parts A, B, C and D, as well as coordination of Medicare-Medicaid data matches.