Medicare Improper Payment Rate Continues To Climb, Recoveries Decline As RACs Are Sidelined

November 24, 2014

CONTACT: Kristin Walter
(202) 898-0995

Medicare Improper Payment Rate Continues To Climb, Recoveries Decline As RACs Are Sidelined

The FY2014 Medicare FFS program improper payment rate is now 12.7%,
representing a $46.0 billion annual loss to the program

Washington, D.C. – The Centers for Medicare and Medicaid Services (CMS) have released the Medicare fee-for-service Recovery Audit Program’s annual report to Congress for the fiscal year 2013. The report shares that during that year Recovery Audit Contractors (RACs) recovered more than $3 billion in Medicare overpayments to providers; have an average accuracy score of more than 96%; and only 9.3% of all RAC determinations were overturned on appeal.

Recovery Audit Contractors were put in place by Congress to root out improper Medicare payments. RACs are only permitted to review 2% of a provider’s Medicare claims per year, but have returned more than $8.9 billion in overbillings to the Medicare Trust Fund since they began their work in 2009.

CMS reports that:

  • RACs corrected $3.75 billion in improper payments, including $3.65 billion in overpayments collected from providers and suppliers and $102.4 million in underpayments repaid to providers and suppliers.
  • In FY 2013, providers initially appealed 500,629 claims, which constituted 30.7 percent of all claims with overpayment determinations. Throughout all levels of appeal, providers appealed 836,849 claims. Of the total claims appealed, 151,645 claims were overturned with decisions in the provider’s favor (18.1 percent). Overall, only 9.3 percent of all RAC determinations were challenged and later overturned on appeal in FY 2013.
  • In FY 2013, an independent validation contractor found that RACs had an average accuracy rate of 96.4%.

“Each year, the RAC Report to Congress reinforces the success of the RAC program and the critical role these contractors play in our nation’s healthcare system,” said Kristin Walter, spokesperson for The American Coalition for Healthcare Claims Integrity (ACHCI). “At 10.1%, the Medicare fee-forservice error rate is the highest of all federal programs. Our coalition urges lawmakers to support the RAC program and the important role it plays in maintaining a stronger, more efficient Medicare program for the millions of retirees and disabled individuals who rely on these critical benefits each day.”

For more information, please visit: www.properpayments.com

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