The United States Department of Health and Human Services (DHHS) is required by law to make the program permanent for all states by January 1, 2010, under section 302 of the Tax Relief and Health Care Act of 2006.
[1] In section 306 of the Medicare Modernization Act of 2003, the United States Congress directed the DHHS to conduct a three-year demonstration program to detect and correct improper payments in the Medicare FFS program.
DHHS, through its Centers for Medicare and Medicaid Services (CMS) branch, began the program in 2005, using Recovery Audit Contractors to perform the actual work of reviewing, auditing, and identifying improper Medicare payments.
At the inception of the program, it focused on Medicare payments in the states of California, New York, and Florida.
The program eventually expanded to Massachusetts and South Carolina before ending in March 2007.