FY2014 RAC Report To Congress: RACs Remain A Valuable, Accurate Integrity Tool


CONTACT: Kristin Walter
(202) 898-0995

FY2014 RAC Report To Congress:
RACs Remain A Valuable, Accurate Integrity Tool

 Washington, D.C. – The Centers for Medicare and Medicaid Services (CMS) have released the Medicare fee-for-service Recovery Audit Program’s annual report to Congress for the fiscal year 2014. The report shares that Recovery Audit Contractors (RACs) returned more than $2.39 billion in Medicare improper payments and maintained their average accuracy score of more than 96%.

According to the report, the amount of Medicare recoveries declined from more than $3 billion in FY2013. CMS attributes the decrease in corrections to their reduction in the number of approved issue areas RAC’s could review after the program pause coupled with the prohibition of RAC review of short inpatient hospital stay claims, an area with a very high billing error rate. CMS shared that despite these claim review reductions “the Medicare FFS Recovery Audit Program has proven to be a valuable tool to reduce improper payments.”

Recovery Audit Contractors were mandated by Congress to review post-payment Medicare claims to root out improper payments and extend the longevity of the program Trust Fund. RACs are only permitted to review 2% of a provider’s Medicare claims per year, but have returned more than $10 billion in misbillings to the Medicare Trust Fund since they began their work in 2009. Recently, Medicare Trustees reported that the Trust Fund would be insolvent by the year 2030, making RACs more vital than ever to extend the life of the nation’s marquee healthcare program.

CMS reports that in FY2014:

  • RACs corrected $2.57 billion in improper payments, including $2.39 billion in overpayments collected from providers and suppliers and $173 million in underpayments restored to providers and suppliers. The amount of underpayments returned to providers significantly increased from $102.4 million in FY2013.
  • The Prepayment Review Demonstration project, which asks RACs to review claims in eleven selected states before they are paid, found that more than 61% of claims reviewed were improperly billed, resulting in $51.8 million in Medicare savings. Unfortunately, this demonstration is on hold pending RAC procurement.
  • The top two areas with the most improperly billed claims remain inpatient hospital stays and those from skilled nursing facilities.
  • In FY 2014, an independent validation contractor found that RACs maintained their average accuracy rate of 96%.

“Each year, CMS reports leave no doubt that the Recovery Audit Contractor program has been successful in achieving its Congressional mandate, “ said Kristin Walter, spokesperson for the Council for Medicare Integrity. “With the Medicare FFS billing error rate at a historic high of 12.7%, which equates to a loss of $46 billion per year, it’s essential that Recovery Auditors are able to function at their full potential. We urge lawmakers to continue their support of the RAC program so even more improperly billed Medicare dollars can be recovered extending the life of the program for the millions of retirees and disabled individuals who rely on these critical benefits each day.”

For more information, please visit: www.medicareintegrity.org

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About the Council for Medicare Integrity
The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.


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