Press Releases


The Centers for Medicare & Medicaid Services (CMS) today announced aggressive new steps to find and prevent waste, fraud and abuse in Medicare. CMS is working closer with beneficiaries and providers; consolidating its fraud detection efforts; strengthening its oversight of medical equipment suppliers and home health agencies; and launching the national recovery audit contractor (RAC) program.

“Because Medicare pays for medical services and items without looking behind every claim, the potential for waste, fraud and abuse is high,” said CMS Acting Administrator Kerry Weems.  “By enhancing our oversight efforts we can better ensure that Medicare dollars are being used to pay for equipment or services that beneficiaries actually received while protecting them and the Medicare trust fund from unscrupulous providers and suppliers.”

As part of these enhanced efforts, CMS is consolidating its efforts with new program integrity contractors that will look at billing trends and patterns across Medicare.   They will focus on companies and individuals whose billings for Medicare services are higher than the majority of providers and suppliers in the community.  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.

Furthermore, CMS will be taking additional steps to fight fraud and abuse in home health agencies in Florida and suppliers of durable medical equipment, prosthetics and orthotics (DMEPOS) in Florida , California , Texas , Illinois , Michigan , North Carolina and New York .  Those additional steps include:

  • Conducting 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;
  • Making unannounced site visits to double check that suppliers and home health agencies are actually in business;
  • Implementing extensive pre- and post-payment review of claims submitted by suppliers, home health agencies and ordering or referring physicians;
  • Validating claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians;
  • Verifying 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;
  • Identifying and visiting high risk beneficiaries to ensure they are appropriately receiving the items and services for which Medicare is being billed.

The additional reviews that will be focused on DMEPOS equipment and supplies with high expenditures and high growth rates expect to identify items such as oxygen supplies and equipment, power mobility devices or power wheelchairs, and diabetic test strips.

For those claims not reviewed before payment is made, CMS is implementing further medical review of submitted DMEPOS claims by one of the new RACs.  The RACs review paid claims for all Medicare Part A and B providers to ensure their claims meet Medicare statutory, regulatory and policy requirements and regulations. If the RACs find that any Medicare claim was paid improperly it will then request repayment from the provider if an overpayment was found or request that the provider is repaid if the claim was underpaid.  The new national RACs can be found at

The new RACs were selected under a full and open competition and will begin to educate and inform providers later in October and November about the program. The RACs will be paid on a contingency fee basis on both the overpayments and underpayments they find. The selection of these new contractors was based on a best value determination that included a sound technical approach for the level and quality of claim analysis and detail to exceptional customer service, conflict of interest reviews and lowest contingency fee.  The 3-year RAC demonstration program in California , Florida , New York , Massachusetts , South Carolina and Arizona collected over $900 million in overpayments and nearly $38 million in underpayments returned to health care providers.

Finally, CMS is consolidating the work of Medicare’s program safeguard contractors (PSCs), and the Medicare Drug Integrity Contractors (MEDICs) with new Zone Program Integrity Contractors (ZPICs). The new contractors will eventually be responsible for ensuring the integrity of all Medicare-related claims under Parts A and B (hospital, skilled nursing, home health, provider and durable medical equipment claims), Part C (Medicare Advantage health plans), Part D (prescription drug plans) and coordination of Medicare-Medicaid data matches (Medi-Medi).   The first two ZPIC contracts were awarded to Health Integrity, LLC for Zone 4 which encompasses Texas , New Mexico , Colorado and Oklahoma and SafeGuard Services LLC for Zone 7 which encompasses Florida , Puerto Rico and US Virgin Islands.

“We are continuing to build on our fraud fighting and program integrity efforts by identifying high risk areas and trends to better focus our limited funds and resources,” said Weems.

Medicare is required by law to pay claims to health care providers for services provided to beneficiaries within 30 days after the claim is submitted, as long as the claim meets Medicare’s rules.  After the claim is paid, CMS or its contractors can review the claim to ensure that the items or services were actually provided or the services were medically necessary.  If the claim was not submitted under Medicare’s rules, CMS checks to see if the claim was submitted in error or may be potentially fraudulent.  Those claims that could be fraudulent are referred to law enforcement for further investigation.

For more information about CMS RAC Web site, please visit RAC Resources.