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RAC audits returned more than $3 billion in overpayments last year

The Recovery Audit Contractor (RAC) program is big business for the federal government. According to the health care industry publication Modern Healthcare, RAC auditors collected more than $3 billion in 2013.

According to Modern Healthcare, recovery auditors identified $3.75 billion in incorrect payments to hospitals and doctors during the 2013 fiscal year. Overpayments made up $3.65 billion of that amount. The magazine reported on the release of an annual report to Congress, available here.

RAC is designed to identify and return improperly paid Medicare claims submitted by health care providers to the federal government. The Centers for Medicare and Medicaid Services (CMS) hires private contractors to assess health care records for billing problems such as improperly coded services, duplicate services and billing for noncovered services.

The program has been controversial from the start, and the latest report is no exception. An RAC trade group found positive news in the report, while a lawyer for a hospital group challenged the accuracy of some parts of it.

At issue is the success rate for appeals. The CMS report found that the success rate for appeals of audits was less than one in five. But a lawyer for the American Hospital Association (AHA) said that assessment uses "fuzzy math." In some cases, CMS counts claims multiple times in the appeals process. For example, a claim that was appealed and decided at both the first level and second level would be counted twice.

AHA figures, in contrast, show that hospitals appealed about half of RAC denials during the first quarter of 2014 and won two-thirds of the time.

For hospitals, physicians and other affected health care providers, the RAC program is a source of uncertainty because of the controversy surrounding the program, the potential resources required to comply with an audit and the financial losses that can result.

An experienced health care attorney can assist physicians and other healthcare providers with compliance programs that can prevent problems that would be uncovered during a RAC audit. A knowledgeable attorney can also provide guidance during a RAC audit and any appeals to reduce possible exposure. For more information on how our law firm can help you, see our page on RAC audits and appeals.

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