RACs returned a record $100 million to providers in the third quarter, CMS announces

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Medicare Recovery Audit Contractors returned $100.4 million in underpayments to healthcare providers in the third quarter of fiscal year 2014, the Centers for Medicare & Medicaid Services has announced.

This is the highest amount of returns for a single quarter since the RAC program began five years ago, according to the American Coalition for Healthcare Claims Integrity, an association of auditors.

The news comes on the heels of a Congressional hearing that examined how RAC activity has contributed to a huge backlog of Medicare claims appeals, and a Senate report that recommended changing the way RACs are paid. Long-term care providers are among the stakeholders that have attacked the RACs for being overzealous.

These complaints from the provider community, as well as the troubled implementation of a controversial “two-midnight rule” for determining hospital inpatient status, has led to a dramatic reduction in RAC activity. Pending a new round of contracts from the CMS, the auditors are not conducting post-payment reviews.

This led to a 22% decline in the amount of overpayments that RACs returned to the Medicare Trust Fund in the third quarter of fiscal 2014, the auditors' coalition stated. That figure is $471.5 million.

"New billing issues emerge constantly and, with CMS approval, recovery auditors review and recover funds related to those issues," ACHCI spokeswoman Becky Reeves said in an emailed statement to McKnight's. "Some issues result in higher overpayments, others result in higher underpayments." 

The coalition is looking into what specific issues factored into the high underpayments in the third quarter, Reeves said.

Click here to access the CMS quarterly numbers.

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