Medicare and Medicaid RACs in FY 2012: 8 Statistics

CMS recently released its fiscal year 2012 report on the state of Medicare and Medicaid recovery auditors, better known as RACs.

The RAC program, which was established in 2009, involves independent contractors, hired by CMS, that are tasked with auditing hospitals, health systems and other providers to ensure all Medicare and Medicaid payments are valid and proper. Medicare RACs have performed a vast majority of the audits in the first four-plus years, recouping almost $2.25 billion in Medicare funds from hospitals and other providers from July through December 2013 alone. Medicaid RACs have been more of a work in progress. As of Sept. 30, 2012, only 36 states had implemented Medicaid RAC programs.

Here are eight statistics on Medicare and Medicaid RACs, according to CMS' report.

•    RACs are paid through contingency fees. Medicare RACs earned up to 12.5 percent of their recovery total, except for claim types that involved durable medical equipment.

•    In FY 2012, Medicare RACs identified $2.4 billion in improper payments.

•    Of that total, $2.3 billion were overpayments.

•    After factoring in costs and appeal reversals, Medicare RACs returned $1.9 billion to the Medicare trust fund in 2012.

•    Contingency fees paid to Medicare RACs in 2012 totaled $142.3 million.

•    Approximately 91 percent of all overpayments were from inpatient hospital claims, most of which involved short-stay admissions.

•    About 7 percent of all Medicare RAC determinations in 2012 were challenged and overturned on appeal, which differs from numbers reported by the American Hospital Association.

•    Medicaid RACs recovered $95.6 million in improper payments in 2012.

•    That total is about 4 percent of what Medicare RACs recovered that year.

More Articles on RACs:
Rep. Jim McDermott Advocates for More RAC Accountability
5 Key Statistics on RAC Audits in Q4 2013
CMS Announces 5 Changes to RAC Program, Halts Documentation Requests

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