FY2015 RAC Report To Congress: Recoveries Decline Due To Program Pause

New RAC Contract Awards Jumpstart Reviews in FY2016

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 2015. The report shares that Recovery Audit Contractors (RACs) identified 618,966 claims with improper payments resulting in $440.69M in improper payments corrected.

According to the report, Medicare recoveries decreased by 91 percent due to constraints placed on the RAC Program that year – down from more than $2.57B recovered in FY2014. CMS attributes the decrease in recoveries to the prohibition on the RACs from performing patient status reviews and the limited amount of claim reviews RACs were permitted to perform in FY2015. CMS reinforced that RACs are “a successful tool in the identification and prevention of improper payments.”

After a pause in the program this past year, on October 31, 2016, CMS awarded the second round of RAC contracts. Five new contracts have been awarded – four regional contracts and one for a new region focused solely on auditing DME/HH-H claims nationwide.

“While the CERT error rate remains above the legal threshold of 10 percent for 4 consecutive years, Medicare recoveries continue to decline due to increased limitations placed on the RAC Program, “ said Kristin Walter, spokesperson for the Council for Medicare Integrity. “We applaud CMS for awarding the new RAC contracts, marking the beginning of a new phase of Recovery Auditing work and demonstrating a renewed commitment to reducing 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. To date, RACs have returned more than $10B in misbillings to the Medicare Trust Fund and according to Senator Claire McCaskill, have extended the life of the program by two full years. Unfortunately, Medicare Trustees recently reported that at current spending levels the Trust Funds would be insolvent by the year 2028, making RACs more vital than ever to help reduce improper payments and extend the life of the nation’s marquee healthcare program.

CMS reports that in FY2015:

• Each RAC had an overall accuracy score of 95 percent or higher.
• RACs corrected $440.60M in improper payments, including $359.7M in overpayments collected from providers and suppliers and $80.96M in underpayments restored to providers and suppliers.
• For every dollar spent on the program, Recovery Auditors saved $2.48 for the Medicare Trust Fund.
• Due to constraints placed on the program, Recovery Auditors were only able to return $141 million to the Medicare Trust Funds, a 91 percent decrease from FY2014.
• The Prepayment Review Demonstration project, which asked RACs to review claims in eleven selected states before they are paid, prevented over $192.8M in improper payments. Due to the success of this demonstration, the GAO recommended that CMS seek legal authority for the RACs to conduct prepayment reviews outside of the demonstration.
• While RACs did not perform any patient status reviews from inpatient hospital claims, 63 percent of overpayments continued to stem from inpatient hospital claims.
• The vast majority (79 percent) of improper payments collected stemmed from complex reviews of claims.
• Looking at all of the appeals administrative levels together, only 37.3 percent of Recovery Audit determinations (Part A, Part B and DME) were overturned on appeal. Among Part A appeals, only 22% of RAC reviewed determinations were overturned.

“Medicare has been losing more than $40B to waste year after year. If we want to extend the life of the Medicare program past its reported insolvency date in 2028, it’s essential that Recovery Auditors are able to function continually and at their full potential. We urge lawmakers to continue their support of the RAC program and allow for even more improperly billed Medicare dollars to be recovered, ensuring future healthcare coverage for the millions of retirees and disabled individuals who rely on these critical benefits each day.”

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

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.