RACs collected nearly $4B in 2013

CMS report finds most improper payments were overpayments from inpatient hospital claims

Fierce Health Finance-The Centers for Medicare & Medicaid Services identified $3.75 billion in improper payments within the Medicare Recovery Audit Contractor (RAC)program, according to CMS’ annual RAC report to Congress for fiscal year (FY) 2013.

The vast majority of improper payments–$3.65 billion–were overpayments, with the figure up $1.35 billion from overpayments in 2012. More than 94 percent of the identified overpayments derived from inpatient hospital claims, many of them specifically from short-stay inpatient hospital admissions later determined to be medically unnecessary.

The RAC program also identified and corrected $102.4 million in underpayments to providers in FY 2013, according to the report. RACs received more than $300 million in contingency fees last year and the program returned more than $3 billion to the Medicare trust funds by paying the contingency fees and $152.4 million in administrative costs.

CMS also found providers initially appealed 500,269 claims, 30.7 percent of the total claims with overpayment determinations. Of these,151,645 were overturned in the providers’ favor, with only 9.3 percent of RAC claims overall overturned on appeal in FY 2013, according to the report.

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