logo

RACFacts: Do You Know What RACs Can Audit?

Do You Know What RACs Can Audit?

Recovery Audit Contractors (RACs) have returned nearly $10 billion in mis-billed taxpayer dollars to the Medicare Trust Fund over the past five years while reviewing less than 2 percent of Medicare claims. Despite this success, the waste-busting RAC program is essentially sidelined.

Recently, the moratorium on RAC reviews of hospital short stays was extended again until October 2015. This two-year moratorium prevents auditors from looking at the number one area for mis-billed Medicare funds at a cost of $1 billion per quarter or $8 billion for the length of the moratorium.

In addition, in February 2014, CMS completely paused the RAC program. It was restarted in August 2014 on a very limited basis due to delays in CMS ability to award new RAC contracts. As a result, Recovery Auditors currently review little more than 350 Medicare billing issues; down from the more than 800 CMS-approved issues RACs were previously tasked to review when the program was at full scale. This means many issues flagged by CMS as significantly problematic are sailing through with no oversight.

Let’s take a look at just a few of the differences between when RACs were operating at full scope (“Then”) and how many issues they currently audit (“Now”).

ISSUE

THEN

NOW

Automated Overpayments

Yes

Yes

Complex Reviews of Diagnosis Related Group (DRG) validation

Yes

Yes

Complex Reviews of Pharmacy

Yes

Limited

Complex Reviews of Therapy

Yes

Limited

Automated underpayments

Yes

No

Complex Reviews of Inpatient Rehab Facilities

Yes

No

Complex Reviews of Skilled Nursing Facilities

Yes

Limited

Complex Reviews of Durable Medical Equipment, Home Health, and Hospice

Yes

No

Complex Reviews of inpatient claims from a clinical coding perspective

Yes

No

Limited Review of Prepayments

Yes

No

The short stay audit moratorium and the CMS scale-back of RAC reviews have caused recoveries of improper Medicare Fee-For-Service (FFS) payments to be at the lowest level in program history, with only $48.25 million recovered in Q1 FY2015, versus a peak of more than $1.4 billion in Q4 2013. In addition, over the past two years, the Medicare FFS billing error rate has risen to the highest level in history – 12.7 percent – equating to an annual loss of $46 billion per year from the Medicare Trust Fund. At this rate, the Medicare program is in serious jeopardy.

Let’s get RACs back to work, for the good of the 50 million Americans who rely on Medicare every day.

 

  • Share

Comments are closed.