RAC Program Recoveries Plummet for Third Consecutive Quarter


July 11, 2014

RAC Recoveries Plummet for Third Consecutive Quarter

Quarterly report reveals devastating impact of oversight ‘pause’ on the Medicare Trust Fund

Washington, D.C. – The Recovery Audit Contractor (RAC) program corrected $572 million in improper Medicare payments in the third quarter of fiscal year 2014, according to a new report from the Centers for Medicare and Medicaid Services (CMS). The figure represents a 22% decline from last quarter and marks a nine-month slump in recoveries by the RAC program, due to an ongoing suspension of Medicare oversight.

RACs returned $471.5 million in overpayments to the Medicare Trust Fund and $100.4 million in underpayments to providers – the highest amount of returns to providers in a single quarter since the inception of the RAC program five years ago.

Medicare uses RACs to review claims, identify errors and recover misused funds. Since 2009, RACs have returned over $8 billion to the Medicare Trust Fund, while reviewing less than 2% of Medicare claims annually. However, the majority of the program was suspended in October 2013, resulting in a dramatic decline in recoveries.

“When oversight stops, Medicare suffers,” said Becky Reeves, spokesperson for the American Coalition for Healthcare Claims Integrity (ACHCI). “We owe it to the taxpayers who have paid into this program and the millions of seniors who rely on this program to keep Medicare strong, solvent and waste-free.”

The current suspension bars RACs from reviewing short inpatient-stay claims – which account for 91% of improper payments – until March 31, 2015. In addition, CMS has yet to award the next round of RAC program contracts, despite the previous contracts ending June 1, 2014. Due to this delay, RACs are currently not conducting any post-payment reviews. Together, these ongoing constraints on program oversight will cost the Medicare Trust Fund at least $5 billion in unrecovered improper payments. Most alarming, this ‘pause’ has halted efforts to identify problematic billing trends, which CMS uses to inform its provider education efforts and prevent future improper payments.

“This report reflects the tangible impact of oversight activities,” said Reeves. “Our coalition urges lawmakers to reevaluate the ongoing constraints on the RAC program, and commit to strengthening Medicare integrity efforts on behalf of taxpayers, seniors and the Medicare Trust Fund.”

Quarterly Recovery Graphic-01


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

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