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Healthcare Providers Should be Concerned about CMS Report on RAC Audits


Healthcare Providers paid $488 million to the Medicare Trust Fund in fiscal year 2011 based on RAC audits, according to the second annual RAC report from the Centers for Medicare & Medicaid Services sent to Congress February 5.

The report, Recovery Auditing in the Medicare and Medicaid Programs for Fiscal Year 2011, said RACs identified $939 million in what they alleged to be improper payments in FY 2011, but returned only $488 million to the Trust Fund.  This means that the RACs, who operate on a contingency basis, recovered only a little over half of the payments that they identified as improper.  WhatleyKallas believes that if healthcare providers were more aggressive in fighting these audits, the recovery rate would have been even lower.   

The use of RAC audits is growing by leaps and bounds.  By comparison, RACs in FY 2010 identified and corrected $92 million in allegedly improper payments, according to CMS's FY 2010 report to Congress. The FY 2010 report did not include information on recovered payments returned to the Medicare Trust Fund.

In addition to the improper payments information, the report said CMS expects to award a RAC contract for Medicare Part C in the summer of 2013. RACs are already operating in Medicaid and in Medicare Part D, part of an expansion of the program required by Section 6411 of the Affordable Care Act.

The CMS RAC report is at