RACFacts: Top 10 Things Hospitals Don’t Want You To Know About Recovery Auditing

Top 10 Things Hospitals Don’t Want You To Know About Recovery Auditing

The Medicare Fee-For-Service error rate has jumped to the highest level in history, 12.7%, which equates to an annual loss to the program of $46 billion.

Since 2005, the hospital industry and their representatives in Washington have been aggressively fighting to keep improperly billed funds – spending $20 million to lobby Congress in 2014 alone (1) – and attack Medicare integrity programs, like the Recovery Audit Contractor (RAC) program.

Here are some important facts to know about Recovery Auditors (RAs), who work to return improperly billed taxpayer funds to the Medicare Trust Fund.

  1. Recovery Auditors are medical professionals, too. RAs are mandated to employ experienced doctors, nurses, certified medical coders, and therapists to review claims and determine whether they were billed according to Medicare policy (2).
  2. Recovery Auditors are very accurate. RAs have a demonstrated accuracy rate of more than 95% and have maintained this rate since the program began in 2005 (3).
  3. Recovery Auditors can’t be overly aggressive. RAs currently can review no more than 2% of any provider’s claims (4).
  4. ​Recovery Auditors only look at issues approved by CMS. RAs must get permission from CMS to proceed with any post-payment reviews they conduct (5).
  5. Recovery Auditors are penalized if a claim denial is overturned on appeal. If a claim is overturned on appeal, the RAs must return their fee paid for the work completed on that claim and eat the labor and out-of-pocket costs associated with that review (6).
  6. The Recovery Audit Contractor Program was mandated by Congress. In 2003, Congress mandated the creation of the Recovery Audit Contractor (RAC) program, with the Medicare Modernization Act of 2003, to combat rampant waste in Medicare and recover misused taxpayer funds (7).
  7. Recovery Auditors are vital to ensuring the solvency of the Medicare Trust Fund. Since the RAC program began, more than $8.9 billion in misbillings has been returned to the Medicare Trust Fund (8).
  8. Recovery Auditors are the most highly regulated Medicare contractor. According to the GAO, RAs are “subject to more rules and regulations than any other post-payment audit contractor.” These regulations do not permit RAs to act outside of the scope of work assigned by CMS (9).
  9. Recovery Auditors are one of several entities monitoring compliance with Medicare billing policy. There are numerous contractors involved in reviewing Medicare claims – QIC, ZPIC, MAC, CERT, etc. Each type of contractor has a different role. This often creates confusion within the medical community, who assign blame only to RAs for all their programmatic concerns (10).
  10. Recovery Auditors do not impact hospital profits. U.S. hospitals are currently a $988 billion industry (11) that made $20 billion in profits in 2012 (12). The 2% of Medicare claims that RA’s review does not impact a hospital’s ability to make a profit.

[1] https://www.opensecrets.org/orgs/summary.php?id=D000000116

[2] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Recovery-Au- dit-Program/Downloads/RAC-Program-Myths-12-18-12.pdf

[3] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Downloads/FY-2013-Report-To-Congress.pdf

[4] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Recovery-Au- dit-Program/Downloads/April-2013-Provider-ADR-Limit-Update.pdf

[5] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Downloads/FY-2013-Report-To-Congress.pdf

[6] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Recovery-Au- dit-Program/Downloads/RAC-Program-Myths-12-18-12.pdf

[7] https://www.govtrack.us/congress/bills/108/hr1/text.

[8] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medi- care-FFS-Compliance-Programs/Recovery-Audit-Program/Recent_Updates.html

[9] http://medicareintegrity.org/wp-content/uploads/2015/04/RAC-Oversight-Facts_CMI.pdf

[10] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/ downloads/MCRP_Booklet.pdf

[11] http://www.ibisworld.com/industry/default.aspx?indid=1587

[12] IBISWorld Industry Report 62211, “Hospitals in the U.S.” August 2012, ibisworld.com

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