“For years the private sector has been using these tools with great success to identify and recover improper payments and the federal government has begun using these techniques on a limited basis in Medicare and it has shown a great potential for saving taxpayer money,” said Sen. Tom Carper (D-Del.), the bill's chief sponsor, in a written statement.
The legislation ties in with the Obama administration's aggressive push to cut down on fraudulent activities in government programs. In 2009, the White House Office of Management and Budget estimated that at least $98 billion taxpayer dollars were lost due to improper federal payments.
Several months ago, the president signed a presidential memorandum that would direct federal agencies to “expand and intensify” the use of audits, such as those performed by recovery audit contractors, and Medicaid integrity contractors. The White House specifically cited Medicare's RAC pilot program as a success story for these types of audits. The pilot was carried out in several states over three years and recouped more than $992 million in overpayments to providers.
The permanent RAC program is in the process of being implemented in all 50 states. Originally, it just targeted fee-for-service claims under Medicare, but has since been expanded to all sectors of the Medicare program and to Medicaid under the new health reform law.
“With these new tools, the challenge I'm making to my team today is to reduce improper payments by $50 billion between now and 2012,” Obama said at the signing ceremony.