RAC’s Rack up Billions

RACs (Medicare Recovery Auditors) racked in $1.37 billion in overpayments and returned $65.4 million in underpayments during the first 6 months of the government’s current fiscal year.

From $75 Million to $2.29 Billion

In all of 2010, the RACs recovered $75.4 million. By 2012, that number had skyrocketed to $2.29 billion. RACs also returned $16.9 million in underpayments in 2010 and climbed to $109.4 million in 2012.

According to data from CMS (Centers for Medicare and Medicaid Services), RACs have already recouped more than half of the $2.29 billion collected all of last year. In the first half of 2013, the recovery auditors have also given back more than half of last year’s $109.4 million in total underpayments.

All auditors named medical necessity as their top issue, with three citing problems with cardiovascular procedures and the remaining RAC citing minor surgical procedures.

$5 Billion So Far

According to CMS, the program has corrected almost $5 billion in faulty Medicare payments since it began in October 2009.

CMS recently adjusting the limits for additional documentation requests in the RAC program. As of April 15, RACs can request a minimum of 20 records in a 45-day period, down from the prior 35-record minimum, according to the story.

The Office of Inspector General remains critical of CMS and its recovery programs. Despite recouping more than $1 billion in Medicaid overpayments, the OIG claimed the agency failed to respond quickly enough to collect about $226 million in overpayments to 11 states, according to a February report.

Some hospitals executives also are reproaching the Medicare and Medicaid RAC programs. For instance, Health Management Associates believes second-guessing by Medicare recovery auditors jeopardizes its physicians and patients. The shift to observation status is a “troubling consequence” of RACs, limiting patients’ options and deteriorating hospital financial performance, Kerry Gillespie, executive vice president of Operations Finance for Florida’s HMA wrote in a March guest commentary for FierceHealthFinance.

Congress Threatens Action

Not surprisingly two U.S. Senators introduce a bill in May to limit Medicare audits. The lawmakers introduced a companion bill to a House measure restricting the number of reviews by recovery audit contractors in order to ease the demand on hospitals and eliminate redundant programs.