Medicare RACs Recoup $2.3B in 2012, Smashing Collections Record

In the federal government's 2012 fiscal year, Medicare Recovery Auditors (RACs) collected $2.29 billion in overpayments from providers — a record that nearly tripled last year's total overpayment collections, according to the latest figures from CMS (pdf).

In the fourth quarter alone, the private, for-profit RACs collected $648 million in overpayments. This figure was just shy of the third quarter's recoupment total of $657.2 million. CMS did not identify how much of those recoupments were tied up in the appeals process or had been successfully appealed by providers.

In FY 2012, RACs returned $109.4 million in underpayments to providers, bringing total corrections on the year to $2.4 billion. Essentially, for every $1 RACs returned to providers in underpayments, they recouped almost $21. Since the program started in October 2009, RACs have collected $3.16 billion in overpayments and have returned $268.2 million in underpayments, equaling $3.43 billion in total corrections.


Medical necessity of cardiovascular procedures continued to be the top overpayment issue for RACs. Minor surgery and other treatments billed as inpatient when they should have been outpatient or observation was another top recoupment reason. CMS did not disclose the most common issues for underpayments.

Of the four RAC companies — DCS, CGI, Connolly and HealthData Insights — HDI has been involved with the most overpayments and underpayments. HDI recorded $854.9 million in corrections for FY 2012. Last December, HMS Holdings, one of the biggest for-profit RACs in the country, purchased HDI for $400 million.

More Articles on RACs:

Providers Filed 85% of Medicare Appeals in 2010

House Bill Would Reform Medicare RAC Program

Medicare RACs Recoup Record-High $657M in Third Quarter

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