Tag Archives: Subcommittee on Health; Committee on Ways and Means

GAO Report Slams RAC Operations

GAO Report Ignores RAC Statistical Methodology Problems 

In a new report “Changes Needed to Improve CMS’s Recovery Audit Program Operations and Contractor Oversight,” the U.S. Government Accountability Office (GAO) has found that as of May 2015, CMS collected “less than $10 million in improper payments, and had not approved new audit work since March 2014.”

Although CMS wrote  a “statement of objectives” for how RACs should identify improper payments, the RACs are lagging behind their targets.  And, CMS is also behind schedule in making regular performance evaluations of RACs.   In addition, CMS has not yet set up clear performance metrics that can be used to measure RAC activities.

RAC Methodology Lacking

One of the key problems is that there still is no clear accepted methodology for RACs to determine improper payments.   In fact, it does not appear that the methods currently used are consistent, or even completely understood by the government.

Statistical Methodology is Absent

A glaring omission in the Report is a lack of discussion of the statistical methodologies used for doing sampling of claims and making extrapolation of over payment amounts.

Even though the term “methodology” appears nine times in the report, it never is mentioned in connection with statistical methodology.

Barraclough on RACs and Stats

Our experience has shown that much improvement is needed in how contractors go about their statistical work.   In almost every case we have examined, the work would almost never pass the equivalent of a Daubert (rule of evidence regarding the admissibility of expert witnesses’ testimony during United States federal legal proceedings) test for scientific quality.


It’s hard to know if the assumption that “CMS collected “less than $10 million in improper payments” is correct since the methodology usually doesn’t support the initial RAC claim amounts. The amount of “improper payments” probably is much lower.

In Barraclough’s review of statistical work, our team has seen everything from use of the wrong formulas, to outright fabrication of data on the part of the RAC contractors.

These practices need to stop, but for the time being at least, it appears that the GAO is unaware of the problem.

Please contact Barraclough Health (email to info@barracloughllc.com) for the best statistical methodology in order  to reverse Medicare and Medicaid audits.