RAC Facts: The State of the RAC Program

The State of the RAC Program

new trend report from the Council for Medicare Integrity (CMI) provides an overview of the current state of the Recovery Audit Contractor (RAC) Program. The analysis looks at:

  • Updates on the Appeals Process: According to OMHA, in FY2015, the majority of appeals came from traditional workloads, not from RAC denials; RAC appeals made up only 19% percent of appeals. Providers continue to flood the Medicare process with appeal submissions expected to surpass one million by the end of the fiscal year.
  • What Issues RACs Can Currently Review: RACs currently review less than 350 Medicare billing issues, down from the 800 issues RACs were able to review when the program was working at full capacity.
  • Changes to Additional Documentation Request (ADR) Limits: Current RAC contracts have been modified to reduce the ADR limit to just 0.5%, a 75% reduction from previous limits, meaning 99.5% of Medicare inpatient claims will not be reviewed. Additionally, a new “good” actor/”bad” actor program has been added to the ADR limit policy in which providers who consistently bill properly will be rewarded with reduced document request limits, and providers who consistently bill improperly will be subject to higher ADR limits.
  • Reductions in RAC Recoveries Despite Sky High Billing Error Rates: In 2014, RACs recovered $2,394,846,151 in overpayments, a 35% decrease when compared to the prior year, due to CMS’s decision to scale back the RAC Program. The Medicare billing error rate remains at record levels, with more than $43 billion lost to waste in 2014 alone.

The CMI report also reviews recently released analyses that drive additional concerns regarding the future of Medicare:

  • Medicare Trustees Projection: Medicare Trustees project the Medicare Hospital Insurance (HI) Trust Fund will be bankrupt by 2030. In order to sustain the obligations of the Trust Fund for the next 75 years, the Fund needs an additional $3 trillion, beginning in 2015.
  • Congressional Budget Office (CBO) Projection: In January 2016, the CBO projected that the Medicare HI Trust Fund would be insolvent in 2026, four years before the Medicare Trustees’ projection.
  • Avalere Health Prediction: Avalere Health estimated that if CMS continues the current scaled-back state of the RAC Program over the next decade, federal spending will be $47 billion higher from 2016 to 2025.

Congress created the RAC Program to identify and recover improper Medicare payments. Since the program began, RACs have recovered more than $10 billion in improper payments while reviewing fewer than 2% of all Medicare claims – compared to commercial audits, where recovery auditors are allowed to review 100% of claims, often for the same providers. CMS has now reduced RAC reviews to just 0.5% of all Medicare claims, which is deeply concerning due to the 12% billing error rate within the program.

The work of Recovery Auditors ensures that taxpayer dollars devoted to Medicare are spent correctly and that the program remains in place.

Let’s get RACs back to work for the 55 million Americans that rely on the program now and the millions of taxpayers who will enroll in the future.


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