On March 25th, the Centers for Medicare and Medicaid Services (“CMS”) released a report finding that in fiscal year 2012, Recovery Audit Contractors (“RACs”) recovered $2.3 billion in Medicare payments that were improperly made to healthcare providers on more than 1.2 million claims. In addition, the report stated that during FY 2012, RACs repaid $109 million to providers and suppliers in underpayments.
RACs work to identify and resolve any overpayments related to claims submitted for Medicare and Medicaid beneficiaries’ healthcare services. Each RAC has the responsibility to identify overpayments and underpayments in a specific geographic area that amounts to one-quarter of the country. The RACs are also tasked with identifying to CMS any common billing errors or other Medicare payment issues.
State Medicaid agencies also contract with Medicaid RACs to recover overpayments and identify underpayments made to Medicaid providers. Under the Affordable Care Act, states were required to implement Medicaid RAC programs by January 1, 2012. While some states have requested and received approval for delaying the required implementation date, as of September 30, 2012, 36 states had implemented Medicaid RAC programs. During FY 2012, those states recovered almost $96 million in federal and state funds.
This report was released soon after the American Hospital Association’s most recent RACTrac Survey results, which noted that 64% of RAC denials appealed were overturned in favor of the provider. The RACTrac survey noted that from the start of the RAC Program in 2010 through the fourth quarter of 2013, 49% of RAC denials that hospitals received were appealed. Especially noteworthy in the survey is the fact that 55% of the hospitals that received RAC denials on the basis of providing unnecessary medical services were able to successfully get those denials overturned on appeal. Providers should consider appealing RAC denials given the high rate of overturned denials on appeal.