On September 29, 2014, CMS released the Fiscal Year (FY) 2013 Recovery Audit Contractor (RAC) report. According to the report, RACs collected $3.65 billion in Medicare overpayments during FY 2013. In addition, the report stated that RACs prevented $22.3 million in improper payments from being made through an 11 state prepayment review demonstration program. RACs also identified $102.4 million in underpayments that were returned to providers.

The report explained that RACs returned $3.03 billion to the Medicare trust fund during FY 2013 after taking into consideration costs to oversee the RAC program, underpayment determinations, and appeal reversals.  Notably, the Region C RAC, Connolly Consulting, had the highest number of corrections in terms of both overpayments and underpayments.

Over 94 percent of overpayments identified were from inpatient hospital claims, and many of the top overpayment determinations in FY 2013 were due to short-stay inpatient hospital admissions. The report acknowledged that increased appeals for these types of claims have contributed to backlogs at the Office of Medicare Hearings and Appeals (OMHA), the agency that oversees the third level of appeal.

According to the report, in FY 2013, providers initially appealed 500,629 claims, or 30.7 percent of all overpayment determinations. Of the total number of claims appealed, 151,645 claims were overturned in favor of providers. Although the report states that provider wins account for only 18.1 percent of all appeals, appealed claims may have been counted as a claim multiple times by CMS if the claim had multiple appeal decisions rendered during FY 2013, thus likely skewing resulting percentages.  Accordingly, the ultimate success rate for providers is likely higher than the reported 18.1 percent figure. 

The full report is available here. 

Reporter, Lauren S. Gennett, Atlanta, + 1 404 572 3592, lgennett@kslaw.com.