RACs recovered $8,000 from skilled nursing facilities, $2.3 billion overall in 2012, report shows

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Medicare recovery audit contractors collected about $8,000 in fiscal year 2012 through a skilled nursing facility claims review pilot, according to a recently released annual report to Congress.

RACs, which began nationwide in 2010, are tasked with reviewing Medicare claims to identify and recover overpayments and underpayments. In fiscal 2012, the auditors recovered about $2.3 billion in overpayments and collected roughly $109.4 million in underpayments, according to the report from the Centers for Medicare & Medicaid Services.

They recovered a small amount in overpayments from skilled nursing facilities and identified no underpayments, the report shows. This is because RACs were reviewing skilled nursing claims on a limited basis in 2012, as part of a pilot program meant to ensure that reviews are accurate and consistent, according to the American Coalition for Healthcare Claims Integrity, an auditor association.

The vast majority of overpayments — more than $2 billion — came from hospital inpatient claims, according to figures in the CMS document.

Only 7% of RAC overpayment determinations were overturned on appeal in 2012, the report states. This might not jibe with providers' impression of the RAC program. For example, hospitals reported appealing more than 40% of RAC payment denials in the fourth quarter of 2012, with a 72% success rate, according to a survey conducted by the American Hospital Association. In a recent letter calling for RAC reform, Rep. Jim McDermott (D-WA) said it appears that providers are usually successful in their appeals.

The CMS report does acknowledge that increasing appeals — particularly related to short-stay hospital inpatient admissions — have led to an appeals backlog.

In fact, the logjam has become so extreme that the Office of Medicare Hearings and Appeals recently suspended all provider appeals at the administrative law judge level for two years. And CMS has paused RAC audits until a new round of contracting is completed, even though the timeline for that is uncertain.

The pause in oversight is “deeply troubling,” and the CMS report shows that the recovery audit contractor program is effective and should be reinstated, said Becky Reeves, spokeswoman for the American Coalition for Healthcare Claims Integrity.

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