RAC Facts: Trend Report Identifies Top 5 Medicare Billing Issue Areas That Put Taxpayer Dollars At Risk

Trend Report Identifies Top 5 Medicare Billing Issue Areas That Put Taxpayer Dollars At Risk

A new trend report from the Council for Medicare Integrity identifies the top five CMS-approved billing issues that contribute most to Medicare waste.

The issues include:

  • Durable Medical Equipment (DME): According to the CMS Comprehensive Error Rate Testing (CERT) program, in FY2014, the error rate among DME billing was 53.1%, accounting for $5 billion in improper payments.
  • Home Health Claims: In FY2014, CMS reported that the billing error rate for this issue area was 51.4%, accounting for 19% of the overall Medicare FFS improper payment rate. The projected improper payment amount for home health services during FY2014 was $9.4 billion. A recent Department of Health and Human Services Office of the Inspector General (OIG) report found that Medicare paid skilled nursing facilities (SNFs) $1.1 billion more than it needed to in fiscal years 2012 and 2013.
  • Medicare Part A and B Pharmacy Claims: This billing area is highly prone to errors and both Medicare overpayments and underpayments are found in this category and corrected.
  • Diagnosis Related Group (DRG) Validation: The majority of corrections of this type are Medicare overpayments, but approximately 25% of these claim reviews uncover Medicare underpayments, allowing RACs to correct the record and ensure the provider is fully and fairly compensated for the work performed.
  • Therapy Cap Reviews: In 2014, President Obama signed into law the Protecting Access to Medicare Act that included a number of provisions affecting outpatient therapy caps. Unfortunately, a great deal of the time service is provided above the threshold.

In FY2014, the Medicare Fee for Service billing error rate reached an all-time high of 12.7%, which equates to a loss of $46 billion that year alone. According to CMS reporting, the error rate has been climbing for the past three years.

The Recovery Audit Contractor (RAC) Program was put in place by Congress to identify and recover these improper payments and since the program began, RACs have recovered $10 billion in improper payments through a review of fewer than 2% of all Medicare claims.

Recovery Auditors ensure that taxpayer dollars devoted to Medicare are spent correctly. 

Let’s get RACs back to work for the 50 million Americans that rely on the program now and the millions of taxpayers who will enroll in the future.


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