CMS Issues FY 2011 Medicare RAC Report to Congress

This week, CMS issued its annual Medicare Recovery Auditor report (pdf) to Congress, confirming that recovery audit contractors collected $797.4 million in overpayments from hospitals and other providers and repaid $141.9 million in underpayments in fiscal year 2011.

The report was the second official Medicare RAC report. CMS concluded that after accounting for RAC contingency fees, appeals and other RAC-related costs, the RAC program saved Medicare more than $488 million in 2011.

The FY 2011 collections figures pale in comparison to the RAC program's projected FY 2012 results. In December, CMS said RACs recouped $2.29 billion in overpayments from providers and returned $109.4 million in underpayments in 2012.

Here are some other major takeaways from CMS' RAC report to Congress. Note: All figures are based on FY 2011.

•    CMS spent $129.4 million to operate the RAC program. Of that total, roughly $82 million were paid to the private, for-profit RACs as contingency fees. (RAC contingency fees ranged from 9 to 12.5 percent for all claims except durable medical equipment.)

•    Medicare hospitals and other providers appeal almost 61,000 RAC claims, which represent 6.7 percent of all overpayment claims. Of those claims, more than 26,000 claims — or 43.6 percent — were overturned in favor of the provider.

•    HealthDataInsights, which is the HHS Region D RAC, collected the most in overpayments in 2011 — $318 million.

•    RAC corrections were highest in California, New York, Illinois and Florida.

•    The top overpayment denial reasons were medical necessity reviews for renal and urinary tract disorders and medical necessity reviews for acute inpatient admissions for neurological disorders.

•    The top underpayment issues were providers using the incorrect MS-DRGs for severe sepsis and lysis of adhesions.

More Articles on Medicare RACs:

4 Tips to Fight RAC Denials and Win
CMS: Medicare RACs Take Back $745M in Overpayments in 1Q of 2013
Medicare RAC Denials to Hospitals Climb 23% in 3Q

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