Revenue Cycle

Things you need to know about RACs

Recovery Auditor Report, August 19, 2008

Editor’s note: The following are some numbers, facts and other important information about Medicare’s Recovery Audit Contractor (RAC) program:

Show the government the money: The RACs corrected more than $1 billion of Medicare improper payments from 2005 through March 27, 2008. Roughly 96% of the improper payments ($992.7 million) were overpayments collected from providers, while the remaining 4% ($37.8 million) were underpayments repaid to providers.

Inpatient is No. 1: Of the overpayments, 85% were collected from inpatient hospital providers, 6% from inpatient rehabilitation facilities, and 4% from outpatient hospital providers.

No contest: Providers chose to appeal only 14% of the RAC decisions. Of all the RAC overpayment determinations, only 4.6% were overturned on appeal. However, a memo from the California Hospital Association obtained by HCPro, Inc. says "the appeals data is incomplete, and significantly understates the volume and impact of provider appeal activity. The current report does not include appeals at the first level of appeal or other appeals in process with providers."

MSP flaws: $12.7 million was returned to the government through overpayments on Medicare Secondary Payer (MSP) RACs.

Appeal payback: Under the demonstration project, the RAC only needed to pay back the contingency fee if the claim was overturned at the first level. However, under the permanent RAC, the payback of the contingency fee would be at all levels.

Helpful Web sites:; and

Sources: William Malm, ND, RN, president of Health Revenue Integrity Services, Inc.; CMS


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